Ethereum Struggles: Network Activity Plummets, Transaction Fees Hit All-Time Lows
Ethereum (ETH) is experiencing significant struggles, with network activity plummeting to levels not seen since 2020. Alongside this, Ethereum’s transaction fees have hit all-time lows, raising concerns about its deflationary model and inflationary risks. Crypto analyst Ali Martinez warns that Ethereum could face a catastrophic 91% crash against Bitcoin (BTC), potentially reaching a low of 0.0020 BTC.
Declining Network Activity and Transaction Fees
Ethereum’s primary issue lies in declining network activity. According to crypto trader EgyHash from CryptoQuant, the number of active addresses on the network has steadily fallen since the start of 2025, causing a dramatic reduction in transaction fees. Ethereum’s deflationary model, which relies on burning transaction fees to reduce its supply, has been undermined by this downturn in network activity. The result has been an increase in inflationary pressure, which could hurt the price of ETH in the long term.
Blockchain data supports this troubling trend, showing that both average transaction fees and block fees have reached record lows. This has made Ethereum less profitable for validators, weakening its overall ecosystem. With fewer active participants and reduced transaction fees, Ethereum’s value is under significant pressure.
Whales Are Selling Off in Droves
Another worrying signal for Ethereum comes from the activity of large investors, also known as whales. Data from Santiment shows that over the past two weeks, whales have sold a staggering 760,000 ETH, worth approximately $1.42 billion. Whale activity has decreased by 63.8% over the last five weeks, indicating a lack of confidence among large investors. If this trend continues, Ethereum could face further downward pressure, triggering a broader market sell-off.
Inflationary Concerns
Ethereum’s deflationary model, which has been crucial to its value proposition, is facing mounting challenges. The network’s upgrade to proof-of-stake, specifically the Dencun upgrade, was designed to enhance its deflationary mechanisms. However, since the upgrade, Ethereum’s burn rate has decreased to its lowest level since the transition. This drop in burn rate has led to increased supply and added inflationary pressure on the cryptocurrency, threatening to erode its value further if network activity does not pick up.
EgyHash warns that unless Ethereum’s network activity and transaction fees recover, the price could remain under significant pressure. The cryptocurrency’s future will depend heavily on whether demand can outpace the increasing supply. If inflation continues to rise without a corresponding increase in demand, Ethereum could face long-term struggles.
A 91% Price Drop? Martinez’s Warning
Amid Ethereum’s ongoing struggles, analyst Ali Martinez has raised concerns about a potential collapse in Ethereum’s price against Bitcoin. Based on the ETH/BTC chart, Martinez identifies a bearish pattern that suggests Ethereum could crash by up to 91%. If the double-top pattern, which is often a precursor to a major decline, holds true, ETH/BTC could fall to as low as 0.0020 BTC.
Currently, Ethereum is trading at 0.02153 BTC, worth approximately $1,776. A drop to 0.0020 BTC would represent a devastating blow for holders of ETH, wiping out a significant portion of its value against Bitcoin.
Can Ethereum Recover?
Despite these significant risks, there is still hope for Ethereum. If it manages to hold above the $1,800 support level and recover like Bitcoin has, there could be potential for a rally. Ethereum would need to break through resistance at $1,900 and $1,950 for a sustained rebound. However, until network activity improves and investor confidence returns, Ethereum remains at a critical juncture.
In conclusion, Ethereum is facing significant challenges, including a sharp decline in network activity, weakening transaction fees, and growing inflation concerns. While the potential for a 91% crash remains a risk, Ethereum could recover if key support levels hold and market conditions improve.
