Ethereum Transactions Drop by 55%: Is This the Beginning of the End for Crypto?
Summer 2024 has brought about a noticeable deceleration in Ethereum, the world’s second-largest cryptocurrency. Recent data indicates a significant decline in both trading volume and the number of transactions occurring on the Ethereum network throughout August.
The current state of affairs is concerning for Ethereum, as it is experiencing a growing lack of interest from institutional investors, coupled with a marked slowdown in transaction activity. August 2024 has been particularly grim for Ethereum, with Block data revealing that the seven-day moving average of daily volume plummeted by approximately 55% compared to the previous month. Economic throughput per day has also seen a drastic reduction, dropping from $6.56 billion at the end of July to a mere $2.9 billion at present.
This downward trend is further evidenced by the decline in daily transactions. Last Sunday, the Ethereum network recorded only 1.07 million transactions, marking its lowest level in several months. This represents a notable decrease from the peak of 1.32 million transactions reached last March. Cumulatively, August has witnessed 27.27 million transactions so far, a figure not observed at such low levels since May 2020.
Several factors contribute to this slowdown in Ethereum activity. Analysts at Coinbase suggest that this phenomenon is part of a seasonal cycle, with summers traditionally being slower periods for financial markets. However, they note that the decline is less pronounced than in previous years. Another key factor is the diminishing institutional interest in Ethereum. Spot Ethereum exchange-traded funds (ETFs) are underperforming compared to their Bitcoin counterparts, indicating a lack of enthusiasm from institutional investors. Analysts, like Valentin Fournier from BRN, are even recommending a preference for Bitcoin, anticipating Ethereum to continue lagging in the upcoming weeks.
Despite these concerning indicators, some experts maintain optimism for the long term. A recent forecast even proposes that Ethereum could surpass Bitcoin in market capitalization by 2029.
