Ethereum (ETH) currently trading around $1,580, down 1% in recent sessions
ETH facing value accrual challenges due to its data availability roadmap after the Dencun upgrade
Losing ground to Solana and BNB Chain in fees captured as L2s pay negligible fees for L1 settlement
Technical analysis shows ETH testing critical support in the $1,450-$1,550 range
Analysts remain divided on future price movement, with some expecting a breakout toward $2,000
Ethereum (ETH) has declined to trade below $1,600 in the Asian session on Thursday, amid growing concerns that its data availability roadmap is hindering value accrual. The second-largest cryptocurrency by market cap is currently trading at around $1,580, down 1% in recent sessions.
According to a report by Binance Research, Ethereum’s scalability has surged by a “scale factor of 15.95x” since the Dencun upgrade in March 2024. However, this improvement has come at a cost.
The upgrade enabled Layer 2 solutions (L2s) to improve their throughput and reduce costs while paying very small fees for Layer 1 settlement. This development has hurt ETH value accrual and weakened the “ultrasound money” narrative, which heavily depends on gas fees.
Ethereum Losing Ground to Competitors
As a result of these changes, Ethereum is losing market share to competitors like Solana and BNB Chain in terms of fees captured.
Alternative data availability layers such as Celestia, EigenLayer, and NearDA are offering higher throughput at very low fees, further challenging Ethereum’s position.
However, Ethereum still maintains a substantial lead in security. It boasts over 1 million nodes compared to Celestia’s 100 and EigenDA’s 170.
Some Ethereum community members have suggested repricing the blob fee market while continuing with plans to increase blob count as a way to fix the value accrual issues.
But the Binance Research report warns that “given L2s are rational businesses, they might be price sensitive and move towards cheaper alternatives should minimum blob fees be too high.”
Based Rollups: A Potential Solution
Many experts believe that based rollups, which rely on L1 sequencing, could solve Ethereum’s scalability and value accrual challenges.
Taiko, a based rollup, has contributed more fees to Ethereum than the top three L2s combined while posting the least amount of data to the L1 over the past year.
Despite this potential, based rollups are not listed as a “top priority” in upcoming Ethereum upgrades. The Pectra upgrade is expected to hit mainnet on May 7, while Fusaka is planned for Q4 2025.
The ETH network experienced $57.08 million in futures liquidations in the past 24 hours, according to Coinglass data. Long liquidations accounted for $38.16 million, while short liquidations totaled $18.92 million.
Technical Outlook and Market Sentiment
ETH has tilted toward the downside since facing rejection at the $1,688 resistance level on Monday. The 50-day Simple Moving Average and a descending trendline extending from March 23 are serving as key resistance levels that could limit upward movement.
On the downside, the $1,450 to $1,550 support range could prove crucial. Bulls outweighed bears the last time prices reached this zone, with investors purchasing over 1.2 million ETH within this range, according to Glassnode data.
The Relative Strength Index (RSI) is currently below its neutral level and testing its moving average line. Meanwhile, the Moving Average Convergence Divergence (MACD) shows receding green histogram bars.
Analyst Solomon Geta believes the price can stabilize in the $1,550 to $1,600 range. He suggests that as global markets improve, Ethereum could see price increases, with a breakout from the $1,670 barrier potentially triggering a rally to the $2,000 mark.
Market sentiment remains mixed, with data from Lookonchain indicating that long-term holders are selling their positions in the $1,550 to $1,700 range.
In a contrasting trend, some large holders are increasing their positions. CryptoGoos reported that a set of large holders recently purchased 77,000 ETH worth approximately $125 million.
Analyst IncomeSharks has warned traders about taking profits on rallies rather than buying dips. He expressed personal regret about not taking profits during previous rallies.
$ETH – A good example why taking profits is important and why buying every dip doesn’t always work. Minus one entry all of these buys offered great chances to take profits (I didn’t). I thought conditions would push us back to utility (It didn’t). Never marry your bags. pic.twitter.com/xN5TmxWZBs
CrypNuevo remains optimistic about ETH’s prospects, making substantial spot buys in the $1,550 to $1,700 range. Similarly, analyst Belle maintains a bullish outlook based on strong support levels, increasing momentum, and positive weekly trends.
On a more cautionary note, analyst Ali Martinez pointed out that over 368,000 ETH has been sent to exchanges since the beginning of the month. Rising exchange reserves typically signal bearish sentiment, as it indicates holders may be preparing to sell.
Even if ETH has bottomed out for this market cycle, it still faces strong resistance around the $2,300 mark.
Ethereum is currently down nearly 50% over the past year, which has eroded investor confidence. Unlike Bitcoin, ETH has not significantly benefited from the bullish developments of 2024, including the approval of spot ETFs.
This articles is written by : Nermeen Nabil Khear Abdelmalak
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