Ethereum Drops 1.24% Amid Whale Activity and Layer-2 Growth

Crypto FrenzyThursday, May 29, 2025 7:52 pm ET
3min read

Ethereum's latest price was $2640.62, down 1.238% in the last 24 hours. Ethereum, the second-largest cryptocurrency by market capitalization, has been the subject of significant attention and analysis in recent news. Arthur Hayes, the founder of BitMEX, has expressed optimism about Ethereum's future, highlighting its potential to outperform other cryptocurrencies despite facing stiff competition from layer-1 coins. Hayes believes that Ethereum's current challenges present a compelling investment opportunity, positioning it as a potential outperformer in the market.

Ethereum's resurgence is driven by several key factors. The cryptocurrency market has experienced tumultuous shifts, yet Ethereum continues to gain traction among investors. Recent insights from the market indicate a vibrant resurgence, with increased activity and investment in the Ethereum network. This growth is not just a fleeting moment but indicates a strong underlying demand for Ethereum.

One of the significant drivers behind Ethereum's potential is the development of layer-2 networks. These networks use Ethereum for gas fees as the underlying currency, thus helping drive distribution and demand for ETH. The potential for platforms like Robinhood to offer tokenized equities using Ethereum's layer-2 solutions enhances the utility and demand for ETH. This ongoing evolution showcases Ethereum's adaptability and resilience in meeting market needs.

Another crucial factor contributing to Ethereum's potential is its dominance in the stablecoin landscape. Ethereum holds 51% of all minted stablecoin supply, which directly correlates to increased activity and investment in the Ethereum network. This immense presence creates a robust ecosystem poised for growth, further solidifying Ethereum's position in the market.

Despite its strengths, Ethereum faces challenges within its ecosystem. Recent criticisms surrounding its ecosystem, highlighted by co-founder Vitalik Buterin's call for a 'wartime' mentality, indicate a need for ongoing adaptation. Shifts in leadership and strategy within the Ethereum Foundation also play pivotal roles in how the community responds to market dynamics, potentially influencing investor confidence.

Ethereum's recent surge driven by whale accumulation and on-chain activity signals a promising outlook. The resurgence in ETH accumulation by mid-sized wallets reflects a return of confidence as the market gears up for pivotal developments. On-chain activity for Ethereum peaked in mid-May, with daily active addresses exceeding 500,000. This surge illustrates a robust interest in the network, with wallets holding between 10,000 to 100,000 ETH increasing their holdings during this rally.

In contrast, the largest wallets, holding between 1 million to 10 million ETH, reduced their positions, indicating either profit-taking or redistribution. This combination of rising address activity alongside selective whale accumulation suggests that Ethereum is gaining strength, potentially positioning itself for future catalysts. In early May, Ethereum saw its price breach the $2,200 mark, accelerating toward $2,700. Interestingly, exchange inflows spiked concurrently with this price rally, indicating a shift in investor behavior.

Ethereum's resurgence is marked by significant whale activity and increased on-chain engagement, indicating potential for a sustained rally. The recent surge amid rising volatility highlights Ethereum’s ability to outpace Bitcoin, capturing the attention of investors globally. The coming days could prove pivotal as Ethereum sets the tone for the next phase of crypto market expansion.

Ethereum is now confronting what many analysts consider the most important resistance level of the current cycle. The zone between $2,700 and $2,800 has become the battleground for ETH’s next major move. A successful breakout could trigger a run toward all-time highs, while rejection may lead to a healthy—but deeper—retracement. Global macro conditions are adding weight to this moment, with rising U.S. Treasury yields and persistent inflation continuing to rattle traditional markets, increasing systemic stress. Yet, in this uncertain environment, Ethereum and Bitcoin have shown resilience, suggesting that investors are increasingly viewing them as alternatives or hedges against traditional financial risks.

Ethereum's on-chain activity remains practically flat despite the promising upgrade. Ethereum has seen little growth on the decentralized finance (DeFi) front, with total value locked (TVL) remaining underwhelming in terms of USD. On top of that, Ethereum has suffered from plunging fees, which can be interpreted as a positive development, but the collapsing fees are a sign of low transactions and, subsequently, low demand. Layer-2 networks such as Arbitrum keep chipping away at the network usage of the main layer. Ethereum's supply is increasing due to the upgrade, which has caused another drop in ETH's burn rate. This means that Ethereum is becoming inflationary again, which undermines the "ultrasound money" narrative.

In summary, while Ethereum faces competition and scrutiny, its current positioning suggests promising potential for investors. With historical trends, stability in stablecoin investments, and evolving layer-2 solutions lining up as key drivers, the future appears bright for Ethereum. As market conditions evolve, keeping a close eye on these developments will be crucial for both investors and enthusiasts alike.