Ethereum Drops 1% to $1,580 Amid Concerns Over Data Availability Roadmap
2min read Ethereum (ETH) has experienced a decline, trading below $1,600 in the recent Asian session. The cryptocurrency is currently valued at approximately $1,580, marking a 1% decrease in recent trading sessions. This downturn is attributed to concerns surrounding Ethereum's data availability roadmap, which is perceived as hindering value accrual.
Ask Aime: What causes Ethereum's recent price drop?
Following the Dencun upgrade in March 2024, Ethereum's scalability has significantly improved by a factor of 15.95x. However, this enhancement has led to Layer 2 solutions (L2s) reducing their costs and paying minimal fees for Layer 1 settlement. This shift has negatively impacted ETH's value accrual and weakened the "ultrasound money" narrative, which relies heavily on gas fees.
Ask Aime: What is driving the recent decline in Ethereum's price?
As a result of these changes, Ethereum is losing market share to competitors such as Solana and BNB Chain in terms of fees captured. Alternative data availability layers like Celestia, EigenLayer, and NearDA are offering higher throughput at very low fees, further challenging Ethereum's dominance. Despite this, Ethereum maintains a substantial lead in security, with over 1 million nodes compared to Celestia's 100 and EigenDA's 170.
Some members of the Ethereum community have proposed repricing the blob fee market and increasing the blob count as potential solutions to address value accrual issues. However, a report by Binance Research warns that L2s, being rational businesses, might opt for cheaper alternatives if minimum blob fees are set too high.
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.
Technical analysis indicates that ETH is testing critical support in the $1,450-$1,550 range. 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. 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 indicating that long-term holders are selling their positions in the $1,550 to $1,700 range. In contrast, some large holders are increasing their positions, with a set of large holders recently purchasing 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. 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. However, analyst Ali Martinez pointed out that over 368,000 ETH has been sent to exchanges since the beginning of the month, which typically signals 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.
