The reduction in Ethereum's exchange reserves has not saved it from a significant price drop, sparking panic in the market community.
Ethereum Exchange Supplies Drop
According to Santiment, Ethereum's supply on exchanges has dropped to 8.97 million ETH due to increased interest in DeFi and staking options. The exchange supply has fallen by 16.4% over the past 7 weeks, hinting at accumulation by crypto whales. Analyst Ali noted a withdrawal of 360,000 Ethereum in the last 48 hours.
Ethereum Faces Competition
Ethereum's biggest challenge comes from Layer-2 solutions. Projects like Arbitrum and Base have handled $5.67 billion in DEX volume in the last week, accounting for more than half of Ethereum's total. This resulted in Ethereum's monthly revenue dropping from $218 million in December to just $46 million in February.
Revenue Struggles and Potential Salvation
The Dencuna upgrade slashed gas fees by 95%, reducing network revenue. According to DefiLlama, Ethereum's TVL has dropped by over 20% in the past month. Meanwhile, Base's TVL increased by 21% over 7 days, making it more attractive to users. Ethereum ETFs with staking could be the potential solution, as the SEC is reviewing them.
Ethereum continues to struggle with market challenges despite exchange supply reductions. Competition and revenue declines remain critical issues, although potential solutions like ETFs may alter the outlook.
