According to a recent report from Coinbase, Ethereum (ETH) is underperforming its peers, with broader market factors playing a major role in this case following the August deleveraging event.
While declining network activity and token inflation are contributing to ETH’s struggles, the main factor appears to be the current structure of the cryptocurrency market, as Coinbase’s Global Head of Research David Duong noted.
In the report, Duong explained that many investors are currently focused on altcoins and other positions that are increasingly difficult to exit. This dynamic is limiting the flow of capital in the broader crypto ecosystem, especially on networks like Ethereum.
“Cryptocurrency enthusiasts are currently driving the market, and this group may be looking to altcoins and other crypto positions that are becoming increasingly difficult to exit,” Duong said, suggesting that for Ethereum to regain momentum, a new catalyst is needed to reignite interest among both developers and investors.
The report noted that Ethereum lacks fresh rhetoric and faces more scrutiny than other smart contract platforms. Ethereum has lagged behind its major crypto peers, recently falling 1.6 standard deviations below its three-month average, indicating increasing underperformance.
In addition, Ethereum’s Total Value Locked (TVL) has fallen to $44 billion, a level not seen since February, down from $67 billion in June. Duong said that Ethereum needs a catalyst to reverse its current downward trend, but both traditional and crypto markets have remained relatively quiet.
While Ethereum-based spot ETFs have the potential to boost ETH prices, institutional interest has largely focused on Bitcoin-based products so far, according to analysts. “We believe many traditional investors are missing out on a better understanding of Ethereum’s supply chain and smart contract utility,” Duong added.
*This is not investment advice.