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Ether prices have fallen 40%, down 40% over the past three months. The world’s second largest cryptocurrency and blockchain have fought the “middle-life crisis” in the face of competition from rivals.
The token representing the Ethereum blockchain, the most widely used in the financial market, has dropped to a $2,087 token. The crypto market has fallen sharply this year as rallies waned following President Donald Trump’s election victory.
But Ether hasn’t performed other big cryptocurrencies like Bitcoin, Solana, Cardano, and more. That decline underscores the loss of etheric favor among investors who once flocked to the corner of the crypto market that had promised to shake up the financial system with “decentralized financial” applications.
“We’ve been working hard to get into the world,” said Carol Alexander, a professor of finance at the University of Sussex. “I’m disillusioned because the scales are falling from my eyes.”
Ethereum has long pitched it as a “growth” network for the Crypto industry as a safe, programmable money form that can store financial assets and automatically take actions.
This has made it the perfect blockchain for mainstream financial institutions who have dabbled in crypto innovation.
Stablecoin publishers such as Tether, USDC, and PayPal use Ethereum to support digital forms of cash, while companies including BlackRock and Fidelity use it as the basis for the US Treasury’s iconic version.
The recent trend of so-called Mimecoin – unused tokens – is sucking in the attention of crypto traders from this year’s Ethereum.
Most coins, including those promoted by Trump and Argentine leader Javier Mailey, used the Solana blockchain.
According to data provider Nansen, Memecoin Trading has generated $721 million for Solana users in the last six months. For a year ago, that’s roughly the same as the $824 million cost Ethereum generated.
“Ethereum is not interesting for most people. It’s hard to be too excited about the incredible feat of engineering when there are so many competing in the attention economy right now,” says Adam McCarthy, research analyst at data provider Kaiko. “Compare this with Bitcoin, where the ‘digital gold’ story is glued to. ”
The Trump administration was disappointed when the government said it would not clean the ether as part of the US strategic reserve of crypto.
“There are two capital pools in the market, (Crypto Native) and ETFS,” said David Lawant, director of research at Falconx, Crypto Prime Broker, USA. “Ethereum has lost ground in its native space and does not have much traction from the ETF crowd.”
A net efflux from a US ETF that invested in $401 million in ether in March – the largest monthly total since July – wiped out the inflows that year.
The leak occurs as the network of Ethereum developers faces a crisis of confidence. According to data from FT Wilshire, the number of Crypto wallets that regularly send and receive payments on the network has remained unchanged since March last year.
Alexander argues that much of the activity in decentralized financial projects using Ethereum has been exaggerated, with many transactions counting multiple times.
She also said that the Ethereum Foundation, responsible for developing blockchain, is split as developers discuss the wider direction of the project. “Decision-making has been a bit of a hellish,” Alexander said.
Geoff Kendrick, Head of Digital Asset Research at Standard Chartered, said Ethereum is in a “middle-life crisis” as it fums a series of technical upgrades aimed at making it more attractive to a larger audience.
Ethereum developers are trying to improve network speed and efficiency, passing transaction processing legwork to third parties. However, it sends the fee to a third party known as the Layer 2 network at the expense of Ethereum developers. The decision “gived value for free,” Kendrick said, adding that “Ethereum essentially produced itself.”
Supporters say Ethereum has the most established community of developers. Famous promoters, including co-founder Vitalik Buterin, are also working on new networks to handle the massive volumes of transactions.
The prices of rivals such as Solana and Ada, which represent Cardano’s tokens, have also dropped by more than 20% over the past three months.
However, Simon Forster, co-head of digital assets at broker TP ICAP, said Ethereum and Ether are becoming one of more and more speculative cryptographic projects.
“That’s a more difficult selling point,” he said. “No one knows which of these distributed networks dominates.”
