3 reasons why Ethereum price is underperforming altcoins
The price of Ethereum (ETH) is currently at a crucial resistance level, but data suggests that the altcoin might face challenges in maintaining its position above $1,900.
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Ether (ETH) has witnessed a 6.2% price surge between November 3 and November 5, but it faces difficulty breaking through the $1,900 resistance. However, it falls behind Bitcoin (BTC) in terms of returns, with BTC gaining an impressive 27% over the last 30 days compared to ETH's 17% gain during the same period.
Several factors contribute to ETH's underperformance. Uncertainty surrounds ConsenSys, a key player in the Ethereum ecosystem, as former employees have filed a lawsuit against the company and its co-founder, Joseph Lubin, over a "no-dilution promise" violation. ConsenSys is responsible for vital infrastructure projects on the Ethereum network.
Regulatory challenges are hampering Ethereum's growth, with concerns around PayPal's PYUSD stablecoin, operating on the Ethereum network, facing scrutiny from the U.S. Securities and Exchange Commission (SEC). Additionally, decentralization criticism in the DeFi space within Ethereum, exemplified by Chainlink reducing the number of participants in its multi-signature wallet, contributes to the altcoin's underperformance.
ETH's high gas fees, averaging $4.90, negatively impact the usage of decentralized applications (DApps). Total deposits on the Ethereum network have also dropped to their lowest levels since August 2020, with Ethereum DApps experiencing a 3% decrease in active addresses over the past month.
In contrast, other major altcoins, including Solana, XRP, and Cardano, have outperformed ETH in the last 30 days, with returns of 75.5%, 37%, and 35%, respectively. This suggests that the challenges facing ETH go beyond regulatory pressure or reduced demand for DeFi and NFT markets. Reduced TVL, declining DApps activity, and an increase in ETH exchange deposits are negatively impacting ETH's ability to break the $1,900 resistance.
The data indicates that Ether's path to surpassing this resistance level may be more challenging than initially expected, and for now, Ether bears may find some respite.
