1. Rising transaction fees negative impact on Ether price
2. Not every Ethereum network metric points to lower activity
3. Investor concerns and situation control

Ethereum has struggled to break above $2,450 for more than two weeks, leading to a 17% drop in decentralized application (DApp) activity. This has raised concerns among traders about whether Ethereum can maintain its support level at $2,250.

Rising transaction fees negative impact on Ether price

Lower transaction volumes can negatively impact the demand for Ether by reducing the fees collected or signaling that users may be migrating to other networks. One ongoing challenge is the relatively high transaction costs, averaging $1.70. While scalability solutions have helped address this issue to some extent, they have also introduced additional complexity for users and raised questions about the long-term sustainability of the network's security. From an investment standpoint, staking Ether has not been particularly attractive, with a yield of 3.3%, compared to the 4.6% return offered by a US 6-month Treasury bill. Only 28.5% of ETH in circulation is currently staked, significantly less compared to other blockchains like Solana (65.8%) and Cardano (62.7%).

Not every Ethereum network metric points to lower activity

Among the negative developments on the Ethereum network was the performance of leading decentralized exchanges (DEXs). Uniswap saw an 18% drop in volume over the past seven days, CoW Swap experienced a 29% decline, and 1inch also posted an 18% decrease. In contrast, BNB Chain volumes increased by 236%, while the TON Network's volumes grew by 54%. Leading layer-2 solutions also saw a decrease in activity. The number of transactions per second dropped from 119 to 94. Despite this, the total value locked (TVL) on layer-2 platforms remained stable at 14.6 million ETH, and the number of active DApp addresses was around 425,000.

Investor concerns and situation control

One concerning trend is the rise in Ether deposits on exchanges, from 12.02 million to 12.24 million ETH, which may indicate potential short-term selling. However, despite the drop in DApp volumes, the Ethereum price remains steady above $2,250, supported by the stability in active users and TVL.

While the drop in DApp volumes raises concerns, the current situation indicates no immediate threat to Ethereum's price. Investors should continue to closely monitor network activity.