Key TakeawaysWeak onchain usage, low fees, and rising competition from other chains and upcoming altcoin ETFs are limiting ETH upside.A recovery requires stronger network activity, clearer Fusaka upgrade benefits, and renewed institutional inflows.Ether trades near $3,200 as reserve companies face shrinking incentives to accumulate more ETH.Ether (ETH) continues to struggle below the $4,000 mark it last touched on Oct. 29, with each rebound attempt fading quickly. The divergence between Ethereum’s institutional strength and Ether’s weaker price action has left traders questioning what is holding ETH back as 2025 approaches.A major driver is the slowdown in network usage. Ethereum transactions have fallen 23% over the past 30 days, while active addresses dipped 3%. Competing ecosystems — including Tron, BNB Chain and Solana — have posted double-digit growth in the same period, helped by lower fees and smoother user experiences.Because staking yield is a primary reason many investors hold ETH, declining activity and falling gas fees naturally pressure prices. Ethereum fees have dropped 88% from late-2024 peaks, reducing staking returns and weakening one of ETH’s core value propositions.1. Ethereum needs stronger onchain activity and higher feesThe slowdown in network demand is a key drag on ETH. Activity driven by memecoins and speculation earlier in the cycle has faded, reducing transaction fees and lowering staking income.Fees have fallen from $70 million per week in late 2024 to their lowest levels in over a year, putting ETH’s yield-based narrative under strain.2. The Fusaka upgrade must offer clearer benefits for ETH holdersWhile the upcoming Fusaka upgrade is expected to improve data processing through rollups, traders say there is still little clarity on how ETH holders benefit economically.Without clearer value accrual — such as fee flows, higher burn rates or improved staking dynamics — the upgrade narrative remains weak.3. ETH faces rising competition from Solana, BNB Chain, and new altcoin ETFsEthereum dominated institutional inflows in early 2024. After the U.S. spot ETH ETF launch, inflows helped fuel a 140% rally in the 100 days leading up to ETH’s $4,200 peak.But the landscape is changing. With Solana’s ETF now live and XRP, BNB and Cardano ETFs preparing for approval, institutions may begin rotating capital into alternative assets.This could divert flows away from Ethereum, especially as other networks gain traction in user activity and DApp revenue.4. Strategic reserve companies must return to accumulationETH’s drop to $3,200 has pushed strategic Ether reserve companies to trade below their net asset value (mNAV). When mNAV falls, these firms lose the incentive to issue new shares to buy more ETH — a mechanism that previously helped propel prices higher.With issuance paused, reserves may need to rely on debt or alternative strategies, reducing a key source of high-conviction ETH demand.Can Ether reclaim $4,000 before year-end?Ether still has structural advantages — dominant TVL, thriving layer-2 ecosystems and the deepest institutional liquidity outside Bitcoin. But reclaiming $4,000 depends on four critical drivers aligning:Stronger onchain activity and higher fees to boost staking yieldsClearer Fusaka upgrade value for ETH holdersSustained institutional inflows despite new altcoin ETFsRenewed accumulation from ETH reserve companiesUntil these conditions strengthen, ETH is likely to remain capped below key resistance levels — even as the broader Ethereum ecosystem continues to expand, according to Cointelegraph.
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