Warning About Ethereum Incident: Can Low Fees and High Inflation Cause Prices to Drop by 91%?

Ethereum, the second largest cryptocurrency by market capitalization, is facing a tough period. According to cryptocurrency trader EgyHash of CryptoQuant, Ethereum’s network activity has slowed down, putting the asset in a difficult position. Compared to Bitcoin, Ethereum’s performance has fallen to levels not seen since 2020, raising concerns that its price is on the verge of collapsing by 91%. Fall network activity and fees According to EgyHash, the issues of Ethereum are mainly due to declining network activity. The number of active addresses has steadily decreased since the beginning of the year. This drop in interaction has led to lower transaction fees, which in turn has affected the overall value of Ethereum. According to on-chain data, both the average fees per transaction and block have reached all-time lows. This decline makes Ethereum less attractive to validators, further impacting its ecosystem. Adding to the concerns, data from Santiment reveals that Ethereum whale investors have sold 760,000 ETH, worth approximately 1.42 billion dollars, in just two weeks. Whale activity has also fallen sharply by 63.8% over the past five weeks, signaling major trouble. If this trend continues, Ethereum may face a large sell-off and more price pain in the future. The impact of the Dencun upgrade The deflationary mechanism of Ethereum, burning transaction fees to control inflation, has weakened due to low network activity. Since the Dencun upgrade, the burn rate has reached its lowest level since Ethereum transitioned to proof of stake, increasing supply and adding inflationary pressure. According to EgyHash, this situation makes it difficult for Ethereum to maintain its value. To recover, network activity and transaction fees must increase. However, if inflation continues to exceed demand, the price of Ethereum may still be under pressure. Warning of a 91% collapse of Ethereum Adding to the pessimistic concerns, cryptocurrency analyst Ali Martinez has warned about the possibility of Ethereum collapsing compared to Bitcoin. According to Martinez, Ethereum could fall 91% based on the ETH/BTC chart.

He pointed out that when reversed, the chart shows a double top pattern—a classic bearish signal that often leads to a sharp decline. “If this pattern occurs, ETH/BTC could fall to 0.0020 BTC” Currently, Ethereum is trading at 0.02153 BTC (1.766 dollars), meaning such a fall would be a catastrophic collapse for this asset. Meanwhile, technical analysis shows that if Ethereum holds above the support level of $1,800 and begins to recover, similar to Bitcoin, the price could break through the resistance levels of $1,900 and $1,950.