Ethereum facing headwinds as its dominance erodes. Ethereum (ETH) is encountering growing headwinds as its market share among Layer-1 blockchains continues to diminish, approaching a critical point.
Ethereum (ETH) is facing increasing headwinds as its market share among Layer-1 blockchains continues to erode, approaching historical lows seen during the 2021 altcoin supercycle.
With the rise of faster and cheaper competitors like Solana, Avalanche, and Base, Ethereum’s total value locked (TVL) and network activity have dropped to less than 55%, down from over 70% at their peak. In just six weeks, Ethereum’s TVL has decreased by over $12 billion, reflecting weakened user demand and capital outflows.
However, Ethereum may have a shot with RWA. Indeed, the blockchain holds 90% market share with over $10 billion TVL.
This underperformance of Ethereum is even more pronounced in the ETH/BTC trading pair, which has now dropped below the psychological threshold of 0.02. Bitcoin‘s persistent dominance, above 54%, indicates a rotation of capital out of altcoins and into major safe-haven assets as favorable tailwinds from US inflation data fade away.
Simultaneously, the SOL/ETH ratio has reached all-time highs in recent days.
With outflows from ETH-backed exchange-traded funds, sentiment around Ethereum remains highly fragile. Although US inflation has eased, investors remain jittery about the potential impact of the US-China trade war on stock prices.
As Ethereum’s market share relative to Bitcoin nears historical lows and bullish sentiment weakens, technical indicators reveal key support levels to watch in the coming days.
While Ethereum’s long-term price outlook remains strong due to its global developer network and media dominance, its short to medium-term performance suggests vulnerability. Unless Ethereum quickly regains the $1,730 level with significant volume and improves its on-chain fundamentals, the downside target of $1,100 could become an increasingly realistic scenario.
Charles Ledoux is a Bitcoin and blockchain technology specialist. A graduate of the Crypto Academy, he has been a Bitcoin miner for over a year. He has written numerous masterclasses to educate newcomers to the industry and has authored over 2,000 articles on cryptocurrency. Now, he aims to share his passion for crypto through his articles for InvestX.
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