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Ethereum price struggles as Layer 2 networks divert fees and Bitcoin dominates inflows. See why ETH’s market share is under pressure and what to watch next.
Ethereum traded near $2,284 recently, marking a decline of more than 2% and making it the only top-10 cryptocurrency to post negative performance for the week [1]. This underperformance highlights a broader shift in capital, as investors increasingly favor Bitcoin and alternative Layer-1 networks over the Ethereum mainnet [1].
| At a glance | |
|---|---|
| Price | $2,284 |
| Weekly Performance | Negative (Underperforming top-10) |
| ETH/BTC Ratio | 0.02835 |
| Primary Catalyst | Capital rotation and Layer 2 fee diversion |
Ethereum’s recent price weakness coincides with a structural change in how the network generates revenue. While Layer 2 scaling solutions have successfully lowered transaction costs for users, they have simultaneously diverted fees away from the Ethereum mainnet [1]. Standard Chartered estimates that Coinbase’s Base network alone has removed approximately $50 billion from Ethereum’s market cap by capturing transaction activity that would have otherwise settled on the base layer [2].
This shift has contributed to a decline in the ETH/BTC ratio, which recently hit 0.02835—its lowest level in approximately 10 months and a significant drop from the 0.04324 peak recorded in August 2025 [1]. Analysts at JPMorgan have noted that Ethereum requires stronger network growth and increased DeFi adoption to reverse this trend of underperformance against Bitcoin [2].
Beyond internal scaling dynamics, Ethereum faces intensifying competition from other networks. Solana is currently testing its "Alpenglow" upgrade, which aims to achieve block finality in 100 to 150 milliseconds—roughly 87 times faster than current speeds—with a mainnet launch expected in the third quarter of 2026 [2]. Meanwhile, the XRP Ledger saw $1.12 billion in net capital inflows during the 30-day period ending May 13, contrasting with outflows of hundreds of millions from both Ethereum and Solana during the same timeframe [2].
Institutional sentiment remains mixed. While Ethereum ETFs recorded approximately $70 million in inflows during the latest period, they continue to trail Bitcoin-focused products in total volume [1]. Furthermore, U.S. spot Ethereum ETFs experienced eight consecutive days of net outflows between May 11 and May 20, totaling $431.86 million [2]. Despite these outflows, some institutional entities remain active; BitMine Immersion Technologies recently increased its holdings to over 5.2 million ETH, representing roughly 4.3% of the total supply [1].
The central question for the market is whether Ethereum can maintain its number two position as prediction markets now place the odds of it losing that ranking before the end of 2026 at 59%, up from 17% in January [2]. Whether this represents a temporary loss of momentum or a long-term shift in ecosystem value remains the primary focus for institutional participants [1].
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AI-assisted synthesis by the TrendWatcher Editorial Desk · sourced from 2 outlets · Aug 29, 2026 · How we report
By moving transaction volume off the main chain, Layer 2s have reduced the number of fees burned, which has slowed the deflationary pressure on the ETH supply.
State channels reduce transaction latency and costs by allowing users to conduct interactions off-chain while maintaining the security of the underlying blockchain.
Investors worry that Layer 2s capture significant profits while contributing relatively little back to the mainnet, potentially weakening the main chain's economic utility.
The Pectra upgrade aims to improve institutional and retail accessibility by increasing blob capacity and introducing account abstraction, allowing users to pay gas fees with stablecoins.