Ethereum (ETH) Under Intense Scrutiny as ETH/BTC Pair Approaches Historic Support Zone

Ethereum (ETH) is under intense scrutiny in the crypto market, particularly in its relationship to Bitcoin (BTC), as the ETH/BTC pair approaches a historically strong support level.

The cryptocurrency market has seen massive shifts in recent months, with Bitcoin (BTC) and Ethereum (ETH) remaining at the forefront of attention. As the dust settles on a tumultuous period for cryptocurrencies, new data from IntoTheBlock is highlighting a crucial development: Ethereum's price has dropped by 50% in the past week.

This decline in price comes amid a broader slowdown in on-chain activity, with the total revenue for Ethereum's base layer decreasing to $605,000 on March 17, a stark contrast to two weeks ago when it stood at $2.5 million.

The decrease in revenue can be attributed to several factors, including the migration of users and protocols to Layer 2 solutions like Arbitrum, Optimism, and zkSync to perform transactions more efficiently.

Moreover, competition from other blockchains like Solana and Avalanche, which offer lower transaction fees and faster speeds, has also led to a decrease in demand for Ethereum's mainnet.

The decrease in price and on-chain activity is a significant finding, especially considering the recent rally in Bitcoin's price, which has seen it exceed the $50,000 mark.

Despite Bitcoin's gains, which are typically associated with an increase in demand for cryptocurrencies, the data from IntoTheBlock indicates the opposite.

This divergence in price trends might be due to the fact that while Bitcoin's price has risen, its trading volume has decreased, suggesting less activity in the market.

On the other hand, Ethereum's price has decreased despite an increase in daily active addresses, which are addresses that perform at least one transaction, indicating that the users who are active in the market are performing fewer transactions on average.

This finding is in line with the fact that, according to DeFi Llama data, the total value locked in DeFi protocols has decreased by 50% since its peak in early 2022, further highlighting the decrease in activity in the decentralized finance ecosystem.