According to Cointelegraph: Ethereum's native token, Ether (ETH), has been locked in a seven-month downtrend as competition among layer-1 (L1) blockchain networks intensifies. The price of Ether has fallen over 36%, from a high of $4,111 in March 2024 to its current level of around $2,600, according to data from Cointelegraph.
Crypto analyst Ignas suggests the reason behind Ether’s sluggish performance is its struggle in the L1 wars—a race among major blockchains like Ethereum, Solana, Avalanche, and Fantom to balance security, scalability, and decentralization, a challenge known as the blockchain trilemma. Ignas highlighted the competition, stating in an Oct. 16 post on X:
"Ethereum isn’t the clear winner of the L1 wars, and the value accrual from layer-2 (L2) solutions is still uncertain."
Solana Gains Ground on Ethereum
One of the primary threats to Ether’s dominance is Solana, which Ignas called “the biggest slap in the face” for Ethereum maximalists due to its monolithic scalability model. While Ethereum relies on layer-2 networks to handle scalability issues, these networks fragment liquidity and user experience, making Solana's single-layer approach more attractive to investors.
As Ethereum continues to face ecosystem fragmentation, Solana (SOL) has outperformed Ether, with SOL surging 552% over the past year compared to Ether’s 57% rise. This shift has seen ETH holders moving investments into other L1 tokens like Solana’s SOL, impacting Ethereum’s market position.
Ether Price Correction on the Horizon?
Ether's recent price action suggests that a correction may be on the way. Justin Bennett, a crypto trader, noted a potential diamond reversal pattern forming on the one-hour chart, indicating ETH could correct toward $2,485 if it closes below current support levels.
As Bitcoin also struggles to break its long-term downtrend, the broader cryptocurrency market remains under pressure.
