Ether (ETH) experienced a 6.2% surge in price from November 3 to November 5. However, the altcoin has struggled to break the $1,900 resistance level. Despite the recent bullish trend, Ether’s 17% return over the last 30 days falls short of Bitcoin’s (BTC) impressive 27% gain during the same period.
One factor contributing to Ether’s underperformance may be the uncertainty surrounding Consensys, a key player in the Ethereum ecosystem. Former employees have filed a lawsuit against the company and its co-founder, Joseph Lubin, alleging that Lubin violated a “no-dilution promise” made in 2015. Consensys is responsible for developing and hosting infrastructure projects crucial to the Ethereum network. The recent ruling in favor of the plaintiffs by the High Court of Zug in Switzerland has further added to the uncertainty surrounding Consensys.
In addition to the regulatory challenges faced by Ethereum, there have been criticisms of the decentralization of financial applications (DeFi) within the network. Chainlink, a preferred solution for oracle services, quietly reduced the number of participants in its multi-signature wallet, raising concerns about governance by regular users.
Ether’s underperformance compared to other major altcoins, such as Solana (SOL), XRP, and Cardano (ADA), further suggests that there are issues beyond regulatory pressure and reduced demand for DeFi and NFT markets. These altcoins have outperformed Ether with returns of 75.5%, 37%, and 35% respectively in the last 30 days.
One pressing issue for the Ethereum network is the high gas fees associated with transactions, including those executed by smart contracts. The latest 7-day average transaction fee was $4.90, which negatively impacts the usage of decentralized applications (DApps).
Furthermore, the total deposits on the Ethereum network, measured in Ether, have dropped to their lowest levels since August 2020. While this analysis does not consider the effects of native Ethereum staking, it highlights a decrease in activity. According to DefiLlama data, Ethereum DApps had a total value locked (TVL) of 12.7 million ETH on November 5, down 4% from two months earlier. In contrast, TVL on the Tron network increased by 13% during the same period, while Arbitrum deposits remained at 1 million ETH.
The decline in activity is also evident in the average number of active addresses across the top Ethereum network DApps, which decreased by 3% compared to the previous month. In contrast, Solana’s top applications saw an average 18% increase in active users during the same period, according to DappRadar data.
Additionally, on-chain activity indicates increased user deposits of ETH at exchanges. While this data does not necessarily indicate short-term selling, the availability of coins is typically viewed as a precautionary measure by analysts.
The present daily average ETH deposit of 255,614 represents a 30% increase from two weeks earlier, suggesting that holders are more inclined to sell as Ether’s price approaches $1,900.
Taken together, these factors indicate that reduced TVL, declining DApps activity, and a higher rate of ETH exchange deposits are negatively impacting the likelihood of Ether breaking the $1,900 resistance level. The price level may be more challenging than initially expected, and for now, Ether bears can take a breath.
It’s important to note that this article is for general information purposes and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
