A Deep Look Into Ethereums Recent Trend

The other day I stepped on Ethereum a bit in terms of looking it over and what's been happening to it overall compared to the rest of the crypto world. Things haven't been looking all that great for it and today I want to take a deeper dive into those reasons, speculations and try and figure out what Ethereum might look like in the future.

*This article is for entertainment purposes only. Do your own research and understand the risks before investing.

Sentiment
In the crypto space I think we are all well aware that just because a blockchain has good fundamentals and is being used doesn't always mean higher prices for the token. This is often how people think of blockchains that it's value if it's a good blockchain will go up and if it's bad it will go down. This simply isn't the case as there are many low fee, solid quality blockchains which just don't get much attention.

We saw negative sentiment for Ethereum just a year ago when it went to the proof of stake model and we are now once again seeing it.

Gas
Ethereum mainly produced value needed by it's high gas prices. I remember spending $50 - $75 simply minting a NFT (which paid off and was well worth the fee at the time) however this fee has been smashed with updates and layer two options taking a bulk of the load away. This is causing a inflation of the token again instead of a burn which was happening as a rather high pace for a good year.

This inflation rate also continues to rise and is now sitting at a little over 0.54%

This also shows us that network demand for Ethereum has dropped but that's honestly to be expected since layer two solutions have taken the brunt of that.

This makes sense as it was said layer two options would take the workload off and then broadcast to Ethereum itself in mass blocks which is what's now happening.

If we look at total transactions however Ethereum is still producing roughly the same amount as it was a year ago but this are now just much more efficient.

Some of these layer twos have gotten rather big such as. Arbitrum one, Base, OP Mainnet, Blast, Mantle, Scroll, ZKsync Era and so forth.

What we are seeing however is that these layer twos as they grow and new ones come online that they are actully locking up more and more ETH. This is causing every day people to not really want ETH and instead for it to be pulled into layer two options in this transition phase.

So while the supply is slowly increasing and the overall sentiment by traders is low for ETH at the moment what we are seeing when we deep dive is that there's growth in layer two solutions which is actully what you want right now so when the next bull market kicks off ETH will be able to handle much better all of the bull run transactions. I believe what's killed the last two bull runs is Bitcoin and Ethereum fees being way too high and it just stagnates the bull run. Will this time be the same thing or are there now enough and better solutions?

Overall this is showing us that Ethereum is actully strong and the ecosystem around it. There's an interesting coloration in the crypto world that shows us when sentiment is down like this but fundamentals are strong that there's often a bull run following shortly after. (However that's just speculation talk and anything could happen it is not financial advice.)

What are your thoughts on Ethereum?