Ethereum continues to lead in terms of stablecoins and tokenization, with its stablecoin supply reaching a whopping $130 billion and tokenized treasuries such as BUIDL surpassing $1.8 billion in assets. However, despite this liquidity surge, activity on Ethereum has declined compared to previous years.

In fact, ether’s performance weakened further in Q1, as the ETH/BTC ratio sank to a five-year low.

According to Coin Metrics’ latest report, this disconnect between Ethereum’s network, its Layer 2 expansion, and ETH’s market value appears to be influenced by multiple factors, particularly its approach to scaling via Layer 2 solutions and the current absence of significant value accrual to ETH through network fees.

Ethereum Faces Value Leakage

The introduction of blobspace with EIP-4844 in the Dencun upgrade significantly altered Ethereum’s network economics. In March 2024, the blockchain generated nearly $30 million in fees, but one year later, that figure plummeted to around $500,000.

Coin Metrics stated that this sharp decline stems from execution shifting to Layer 2s, with minimal value returning to the main chain. Base, Arbitrum, and Optimism have collectively paid just $13 million in blob fees while enjoying over 90% profit margins from sequencer revenue. This, in turn, has sparked concerns about value leakage, as Ethereum shoulders security costs while Layer 2s capture most of the economic benefit.

Additionally, blob fees make up just 0.07% of total fees, which has led to lower ETH burn.

Over the past week, Ethereum has burned roughly 70 ETH per day. This has caused net issuance to rise, thereby pushing the annual inflation rate up to 0.79%. While this is currently putting downward pressure on ETH’s price, the network’s longer-term scaling efforts through Layer 2s may require more time to yield significant results.

What’s Next for Ethereum?

As blobspace becomes more commoditized and Layer 2 business models become increasingly profitable, the number of Layer 2s and blob transactions is expected to rise. With nearly 21,000 blobs posted daily, Ethereum is consistently reaching its target of 3 blobs per block.

With the Pectra upgrade, and Fusaka soon after, Ethereum aims to gradually expand blob capacity through EIP-7691, which would lower transaction costs and encourage more Layer 2 activity. This is expected to increase aggregate blob fees. As a result, Ethereum plans to scale its Layer 1 by increasing gas limits and focusing on high-value sectors like stablecoins, tokenization, and DeFi, creating a potential pathway for long-term value growth in ETH.

As Pectra brings improvements, the focus may shift to Ethereum’s staking ecosystem, with issuers eyeing the launch of staked Ether ETFs in the next quarter.

Ethereum is attempting a recovery after bouncing from the $1,800 zone, but the price remains trapped below key resistance, and the broader trend is still bearish. Short-term momentum has improved slightly, but upside continuation remains uncertain.

Technical Analysis

By Edris Derakhshi

The Daily Chart

The daily chart shows ETH stabilizing around the $1,900 area following a sharp rejection from the $2,200 zone in late March. The asset remains well below the 200-day moving average, which continues to slope downward around the $2,800 region, confirming bearish market structure on a macro level.

The most recent bounce has taken the price back into the $1,900 resistance zone, but the buyers are yet to show strong follow-through. The RSI is also rebounding from oversold levels, suggesting short-term relief, but there is no bullish divergence or momentum breakout to support a sustainable trend reversal. A decisive daily close above $1,950–$2,000 would be the first signal that buyers are regaining control.

The 4-Hour Chart

On the 4-hour timeframe, ETH is trading within a horizontal consolidation pattern, with the lower boundary at $1,800 and the higher one near the $2,200 region. After the recent sell-off, the price rebounded into the $1,900 supply zone but faced immediate resistance and is now pulling back slightly.

Moreover, RSI hit near-overbought conditions during the bounce and is now cooling off, indicating potential consolidation or another retest of the $1,800 area. If ETH fails to break out above the higher boundary of the pattern, another leg down to sweep the $1,780–$1,750 liquidity becomes more likely. A confirmed breakout above $2,200, however, would invalidate the pattern and suggest a short-term bullish reversal.

Sentiment Analysis

By Edris Derakhshi (TradingRage)

Exchange Reserve

Ethereum’s exchange reserve has continued its multi-month downtrend, now reaching a new low of around 18.3M ETH held on trading platforms. This persistent decline suggests long-term holders and institutions are moving assets into cold storage or staking, reducing immediate sell pressure.

Despite the bearish price action, the supply on exchanges is not increasing, which historically has acted as a bullish divergence when accompanied by reversal structures. The low reserves may act as a supply constraint once demand re-emerges, but for now, the lack of bullish momentum means this on-chain trend is supportive, not decisive.

XRP is holding above key support on both USD and BTC pairs but remains under pressure, with no strong bullish momentum in sight. Price action is consolidative and leaning slightly bearish in the short term.

By Edris Derakhshi

The USDT Paired Chart

On the USDT pair, XRP is currently hovering above the $2 support zone after a series of lower highs following the rejection from the $3.00 resistance area. The asset has yet to make a higher high since mid-February and continues to face selling pressure on each attempt to rally.

The 200-day moving average is rising steadily and currently sits well below the price near the $1.80 mark, acting as dynamic support for now.

The RSI is also drifting near the 40–45 zone, suggesting weakening momentum without being fully oversold. If the buyers fail to defend the $2, the price may quickly slide toward the next demand around $1.50. On the other hand, to shift sentiment, XRP needs to reclaim $2.5 and close firmly above it.

The BTC Paired Chart

The XRP/BTC pair has been consolidating after a strong rally in November last year, with the price currently trading around 2,500 SAT. The pair has faced resistance near 3,000 SAT, which has led to the recent pullback.

The 200-day moving average at approximately 2,000 SAT remains intact, indicating that, similar to the USDT pair, the broader uptrend is still in play. Yet, the RSI is trending lower, suggesting a potential weakening of momentum, but as long as XRP holds above 2,000 SAT, a bullish continuation above the 3,000 SAT area could be expected.