Ethereum (ETH) price drops as institutions dump the base layer

Usage on the base layer is plummeting, core metrics are nearing multi-year lows, and even co-founder Vitalik Buterin is proposing a radical architectural overhaul.

Institutions are dumping Ethereum (ETH) and pivoting to Solana (SOL), blockchain data shows, highlighting the shifting preferences of large investors in the evolving cryptocurrency landscape.

As the apex cryptocurrency faces growing pressure, with core metrics nearing multi-year lows and even co-founder Vitalik Buterin proposing a radical architectural overhaul, institutions are diversifying their portfolio away from ETH to explore emerging chains.

Among the institutions trimming their Ether exposure is cryptocurrency investment firm Galaxy Digital.

According to onchain analytics platform Lookonchain, Galaxy withdrew 65,600 ETH to Binance in recent days.

The investment firm’s Ether exposure peaked at around 98,000 coins in February, but that has dropped to almost 68,000 ETH at the time of writing, as per Arkham data.

While Galaxy’s holdings may have declined in recent weeks, they’re still higher compared to the start of the year. Its Ether holdings also reflect a broader trend seen in Ethereum-based investment products.

According to digital asset management firm CoinShares, ETH funds saw $26.7 million in outflows over the past week, bringing total outflows to $772 million over eight weeks. However, year-to-date flows remain positive, with $215 million in net inflows.

Among other institutions trimming their ETH holdings is Paradigm.

On April 21, Paradigm moved 5,500 ETH to Anchorage Digital, onchain data shows.

The investment firm had previously transferred around 97,000 ETH (around $301.57 million) to Anchorage from January 2024, which was then moved to centralized exchanges, as onchain analyst EmberCN noted.

“While institutional investors initially bought into the ‘ultra-sound money’ narrative, they’re now facing a reality where decreasing protocol revenue and weakening tokenomics create legitimate concerns,” Jayendra Jog, co-founder of Sei Labs, told Cointelegraph.

Buterin proposes RISC-V to substitute EVM

On April 20, Buterin proposed the RISC-V instruction set to substitute the current Ethereum Virtual Machine contract language, aiming to improve the speed and efficiency of the network’s execution layer. Some view the proposal as a white flag on the existing architecture.

“Vitalik’s RISC-V proposal is essentially an acknowledgment that the EVM’s fundamental architecture has reached its limits. When Ethereum’s founder proposes replacing the core VM that underpins the entire ecosystem, it signals not evolution but recognition of a design limitation that can’t be incrementally improved,” Jog added.

The proposal follows a leadership shuffling in the Ethereum Foundation following rising complaints on the project’s initiative.

"We're focused on delivering clear, short-term value in the form of scaling solutions and efficient layer-2 integration to amplify the impact of the ecosystem's collective efforts."

The Ethereum Foundation will shift its focus to near-term goals, such as layer-1 scaling and layer-2 scaling support, according to the new co-executive director of the Ethereum Foundation, Tomasz Stańczak.

"We're focused on delivering clear, short-term value in the form of scaling solutions and efficient layer-2 integration to amplify the impact of the ecosystem's collective efforts," he stated on X.

The shift in priorities comes amid growing concerns over the apex cryptocurrency's performance. Despite hopes that layer-2 networks would siphon off transactions and leave the base chain less congested, the opposite has occurred.

Instead, layer-2 networks are continuing to siphon value from the base chain, leading to a drop in protocol revenue and unclaimed ether, which has snowballed into a broader decline in core metrics.

Moreover, the apex cryptocurrency is returning to a net inflationary state as a result of dropping network activity and a decrease in gas fees, which are used to burn ether and decrease the circulating supply.

According to data from IntoTheBlock, Ethereum collected 1,873.52 ETH in fees from April 14 to April 21. That's slightly higher than the 1,697.61 ETH in fees from the week starting on March 17, which was the lowest amount of fees collected (measured in ETH) since July 31, 2017.

The heating used to be measured in units of imperial heat, but now it's measured in units of metric heat. It's still the same heating, though. It's just the units that have changed. Similarly, the way we measure the burning of ether has changed, but the burning itself remains the same.

March 13 saw the lowest amount of ether burned in a single week since August 2016. However, later that year, during the summer months, saw no burning at