$259.2 million worth of Ethereum has flowed to exchanges – another sign of Ethereum facing price pressure?

With the ongoing ICO sell-off, a massive flow of ETH to exchanges

•  The Dencun upgrade has caused ETH to lose some revenue to L2s

Ethereum (ETH), the second-largest cryptocurrency after Bitcoin (BTC), has recently faced increasing selling pressure, particularly as traders are moving ETH to exchanges.
At the time of publication, over 108,000 ETH, worth approximately $259.2 million, was sent to exchanges within just 24 hours.
Such an influx often indicates a potential decline in Ethereum’s price, as increased supply combined with stagnant demand tends to push prices down.

Source: Ali/X

Additionally, one of the participants in the Ethereum ICO has recently been continuously selling Ethereum.

They recently sold 6,000 ETH worth $14.11 million, bringing their total sales from September 22, 2024, to 40,000 ETH. These sales were executed at an average price of $2,525.

Despite these transactions, the ICO participant still holds 99,500 ETH, valued at approximately $238 million, indicating potential selling pressure in the future.

Source: Lookonchain

ETH has also performed poorly compared to other risk assets such as Bitcoin and the S&P 500.

While Bitcoin has seen a slight decline of 0.32%, and the S&P 500 has experienced a positive change of 3.63%, ETH has significantly dropped by 26% over the past three months.

The total network fees on Ethereum have also decreased by 43.9%, reaching $247.6 million. This drop in fees is impacting Ethereum’s momentum. Additionally, on-chain activity on the Ethereum mainnet has decreased over the past three months.

Source: IntoTheBlock

The Dencun upgrade has also played a role in Ethereum’s poor performance. This update, which includes EIP 4844, has reduced Layer 2 (L2) transaction costs by more than 10 times, leading to a surge in L2 activity.

As a result, ETH Mainnet fees have significantly decreased and reached their lowest point. This has impacted the burning of ETH, and after previously following a deflationary path, the cryptocurrency has once again turned inflationary.

Source: IntoTheBlock

The summer calm and sideways trading in traditional markets have led to chain fees dropping to their lowest level in years. Lower fees and reduced ETH burning resemble a company facing declining revenue and halting stock buybacks. Given these changes, it’s not surprising that ETH’s price has struggled.

Additionally, the long-term benefits of ETH, which can derive from the miner-extractable value (MEV) of Layer 2s, remain unclear.

Impact of L2s on ETH and Rising Optimism

Ultimately, Optimism (OP), one of the leading Layer 2 networks on Ethereum, has outperformed its governance token compared to other networks.

In the third quarter, the OP/ETH pair increased by 28%, benefiting from increased activity on the Layer 2 chain, indicating it’s performing better than Ethereum.

This rising optimism is partly due to Base L2’s activity on Coinbase’s Superchain, emphasizing the growing dominance of Layer 2s. This continues to impact Ethereum’s value.

Source: IntoTheBlock