Ethereum (ETH) Price Drops to 2020 Lows as Network Activity Slows

Ethereum, the second-largest cryptocurrency by market value, is going through a rough patch. According to crypto trader EgyHash from CryptoQuant

The second-largest cryptocurrency, Ethereum (CRYPTO: ETH), has been struggling lately as network activity slows, putting the cryptocurrency in a difficult position, EgyHash from CryptoQuant noted.

This comes as Bitcoin (CRYPTO: BTC) has begun to recover, but Ethereum’s performance has fallen to levels last seen in 2020, which could lead to a 91% price crash, the analyst stated.

According to the analyst, the main problem is the declining network activity. Since the beginning of the year, the number of active addresses has been dropping steadily, leading to lower transaction fees, which are crucial for Ethereum’s value.

This is confirmed by blockchain data, which shows that the average transaction fee and block fee have hit record lows, making Ethereum less profitable for validators and ultimately weakening its ecosystem.

As investors grow increasingly uneasy, large investors, or whales, have sold 760,000 ETH—worth about $1.42 billion—in just two weeks, according to Santiment.

This marks a 63.8% decrease in whale activity over the last five weeks, which is a worrying sign. If big investors continue to sell, it could put more downward pressure on Ethereum and lead to a major sell-off.

Furthermore, Ethereum’s deflationary mechanism, which burns transaction fees to reduce supply, has weakened due to lower network activity. Since the Dencun upgrade, the burn rate has dropped to its lowest level since Ethereum switched to proof-of-stake.

This has increased supply and added inflationary pressure, which could hurt the price even further.

EgyHash concludes that unless network activity and transaction fees pick up, Ethereum will struggle to maintain its value. If inflation keeps rising faster than demand, the price could stay under pressure for a long time.

Crypto analyst Ali Martinez has raised alarms about a potential Ethereum collapse against Bitcoin. Based on the ETH/BTC chart, Martinez predicts that Ethereum could drop by 91% if a bearish pattern plays out.

According to Martinez, when flipped upside down, the chart reveals a double-top pattern, which often signals a major decline. If this pattern holds, ETH/BTC could fall to 0.0020 BTC.

Right now, Ethereum is trading at 0.02153 BTC ($1,766). A drop to 0.0020 BTC would be devastating for holders.

However, there is still a chance for a rebound. If Ethereum manages to hold above the $1,800 support level and starts recovering like Bitcoin, it could push past the $1,900 and $1,950 resistance levels.

Ultimately, Ethereum is at a critical point. Its future will depend on whether network activity improves and investor confidence returns. Until then, the risk of further losses remains high.

See More: Top 5 Cryptocurrencies To Watch This Week: Meme Coins Heat Up As Bitcoin, Ethereum Show Mixed Trends