Ethereum is not likely to break $ 3,000 in close term as network activity stays lazy
Key Takeaways:
Ethereum’s TVL reduction will vary with increasing fees
Ether (Eth) is struggling to recover the $ 2,700 mark despite an 8% gain between June 2 and June 4. Although the price gained 48% between May 5 and June 5, further upside down appears to be limited due to some weak network activities and increased competition.
Total deposits in the Ethereum network, measured by Total amount that is locked (TVL), fell to 25.1 million ETH on June 5, marked a 17% decline from last month. Ethereum is still leading the total deposits, but Solana’s TVL rose 2% in the same 30-day span, reaching 65.8 million Sol (SOL). This indicates that the edge of the Ethereum in rivals gradually explodes.
The main contributing to Ethereum’s TVL rejection includes Sky (former Makerdao), which drops 48% to 2.1 million ETH, and Curve financedown 24% to 1.1 million et.
However, it overlooks the fact that the average network fees in the Ethereum climbed 150% month-to-month. Increasing this fee strengthens the protocol’s combustion mechanism, reducing ETH inflationary pressure.
Dex activity rises, but Solana beat Ethereum by volume
A driver behind the higher fee is the flowing in Decentralized exchange (DEX) Activity. Uniswap held more than $ 2.6 billion in the sun -day volume to June, compared to $ 1.65 billion in early May.
Although this trend supports the price of ether, rival networks such as the BNB chain and Solana have expanded their share of the dex activity. Currently, Ethereum ranks the third in this segment.
The BNB chain has led to the growth of the DEX volume, although this advantage is less significant due to a very low network fee. Lower costs make it easier to artificial activity collapse, making comparisons with Solana and Ethereum that are somewhat misleading.
Related: Ethereum Reclaims Defi Market as Bots Drive $ 480b Stablecoin Volume
Even after the arrangement for this distortion, however, Solana’s DEX volume exceeded Ethereum’s. This change raises questions about whether ETH is still maintaining a competitive edge.
Interestingly, the leading decentralized applications such as Hyperliquid and Pump would choose to launch their own blockchains instead of developing Ethereum Layer-2 solutions or using alternatives such as Solana.
ETH futures show a lack of bullish convincing
Futures groceries For Ether offers a perspective on the sentiment of professional traders. In balanced conditions, monthly ETH contracts generally trade in a 5% to 10% annual premium to show off the extended period of remuneration.
On June 5, the Ether Futures Premium dropped to 5%, down from 6% a week before. It signifies a slight reduction in long positions, although the premium remains within a neutral range. More importantly, the last time the ETH futures exchanged above a 10% premium was in late January, suggesting an ongoing lack of convincing.
On the positive side, the institutional interest in ETH has grown, strengthening support near $ 2,500 levels.
Thus, the conclusion that institutional demand for the ether is that the prevention is inaccurate. Between May 22 and June 4, the area based in the US Ether -exchanged funds (ETF) attracts $ 700 million to net inflows. Interestingly, less than a day of net outflows over the three-week period, strengthening the $ 2,500 support level.
So, while demand for ETH remains, especially from institutions, other metrics suggest that the bulls probably won’t break $ 3,000 in the near term.
This article is for general information purposes and is not intended to be and should not be done as legal or investment advice. The views, attitudes, and opinions expressed here are unique and do not necessarily reflect or represent the views and opinions of the cointelegraph.
