Ethereum’s Struggles Continue: Could ETF Launch Reverse the Trend?

Ethereum’s Struggles Continue: Could ETF Launch Reverse the Trend?

In this report, we delve into Ethereum’s performance in June 2024. Despite the complex trends in ETH’s price, Cryptonews explores network activities, key ecosystem updates, and their potential implications for Ethereum’s future.

Key Takeaways:

  1. ETH Price Decline: ETH price fell by 10.4% from $3,803 to $3,406 in June. Concerns about a potential Bitcoin price drop and decreasing institutional investment contributed to this decline.
  2. ETF Delays: The SEC delayed the approval of spot Ethereum ETFs, pushing the expected launch to mid-to-late July, further dampening market sentiment.
  3. Network Activity: Daily active addresses increased from 384.2k to 466.6k in June, peaking at 610.8k on June 22. However, new address creation dropped by 14.8%. Ethereum’s total value locked (TVL) fell by 13% from $66.9 billion to $58.3 billion.
  4. Transaction Fees: Ethereum transaction fees reached multi-year lows due to increased activity on Layer 2 networks. EIP-4844 reduced transaction costs on these networks but also decreased ETH burned on the mainnet, impacting future inflation.
  5. DEX and NFT Market: Ethereum maintained its lead in DEX trading volume, but Solana is gaining ground. Global NFT sales volume decreased by 25% compared to May, with Ethereum experiencing a significant 17% decline in June. The number of daily Ethereum NFT sellers hit its lowest level since June 2021.

1. What is Ethereum?

Founded in 2013 by Vitalik Buterin, Ethereum is a distributed blockchain computing platform designed for executing smart contracts and decentralized applications (dApps). The Ethereum Virtual Machine (EVM) processes these smart contracts, and the network uses a proof-of-stake (PoS) consensus mechanism for scalability and sustainability.

2. ETH Price Drops Despite Anticipated Spot ETF Boost

June 2024 saw Ethereum’s price decline due to fears of a Bitcoin price dump and declining institutional investment. ETH began the month at $3,803, dropped to $3,258 on June 24, and closed at $3,406 on June 30. Several factors, including worsening macroeconomic conditions, lack of institutional demand, and regulatory uncertainty, kept ETH prices below $3,600.

Ethereum’s exchange-traded products (ETPs) experienced significant outflows in late June, with $61 million withdrawn, marking the largest outflow since August 2022. The SEC’s delay in approving spot Ethereum ETFs added to the negative sentiment.

3. Ethereum ETFs: Greenlight Given, But When Will They Trade?

The SEC approved eight 19b-4 filings to list spot Ethereum ETFs on various U.S. exchanges, but the launch is delayed due to pending S-1 form approvals. The timeline for these ETFs remains uncertain, but their eventual introduction is expected to attract significant capital inflows and drive up ETH prices.

4. Ethereum’s Network Activity

Despite the price drop, Ethereum’s network activity saw some positive trends. Daily active addresses increased by 64%, peaking at over 610.8k on June 22. However, new address creation decreased by 14.8%, and daily transactions slightly declined by 2%. The TVL in Ethereum’s DeFi protocols fell by 13%, indicating a possible shift of capital away from these investments.

5. Investors Move ETH Off Exchanges

Exchange balances of ETH reached a four-year low of 16.6 million ETH on June 30, indicating reduced selling pressure and a preference for long-term holding. The amount of staked ETH on the Ethereum Beacon Chain increased to 33.3 million, reflecting a trend toward staking rather than selling.

6. Ethereum Ecosystem Updates

June 2024 brought mixed signals for the Ethereum ecosystem. Key updates included:

  • EIP-7732: A proposal aimed at improving blockchain speed by overhauling the block validation process.
  • Governance Concerns: Galaxy Digital raised concerns about Ethereum’s decentralized governance.
  • SEC Investigation Closure: The SEC closed its investigation into Consensys, alleviating some regulatory pressure.

7. Ethereum-Based Protocols and DEXs

Ethereum faces increasing competition from alternative blockchains like Solana and BNB Chain. Despite this, Ethereum maintained its lead in DEX trading volume, though Solana made significant gains. Layer 2 scaling solutions continued to see increased transaction activity.

8. Ethereum NFTs

Global NFT sales volume decreased by 25%, with Ethereum-based NFT sales dropping by 17%. The number of daily Ethereum NFT sellers fell below 4,000, the lowest since June 2021. The rise of alternative blockchains with lower transaction fees poses a challenge to Ethereum’s dominance in the NFT space.

Notable NFT Launches in June:

  • Nostalgic Cartoons (June 1 – June 8): A collection evoking childhood nostalgia with 30 hand-drawn 2D digital collectibles.
  • Origaminal (June 5 – June 12): A collection of 288 NFTs blending traditional origami with digital art.
  • Fushi Panda (June 13 – June 20): 8,888 unique digital collectibles designed to bring luck and happiness.
  • FTLS Reimagined (June 25 – July 2): A series of 47 AI-generated artworks reimagining a previous collection.

Conclusion: Ethereum in June – A Mixed Bag with an Uncertain Future

June 2024 presented a complex outlook for Ethereum. While there were signs of progress in network activity, scaling efforts, and adoption, the month ended with disappointing price performance, fewer NFT sales, and ongoing regulatory uncertainties. The upcoming launch of Ethereum ETFs and continued development of scaling solutions will be critical in shaping Ethereum’s future. The ability to navigate regulatory challenges and foster innovation will determine Ethereum’s long-term success.

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