Ethereum dips below $1,700 as network usage hits record highs

Ethereum's network activity hit all-time highs in Q1 even as its token price fell to a one-year low.

Ethereum fell below $1,700, extending a 29% year-over-year decline, as a Token Terminal report showed the network recorded all-time highs in monthly active users and transaction throughput during the first quarter.

"The divergence between Ethereum's usage and its financial performance is becoming more pronounced," the Token Terminal Q1 2026 ecosystem report, published June 18, said. "Monthly active users, transaction counts and throughput all reached new highs, while market capitalization, trading activity and fee generation declined."

ETH traded at $1,749.00 as of 09:19 ET on June 18 before slipping below $1,700, according to CoinGecko. The token is down 29% from a year earlier and 65% below its November 2021 all-time high of $4,892.00. Ethereum's market capitalization stood at $211.1 billion. The network's fee revenue declined during Q1 even as usage expanded, reflecting the ongoing migration of activity to layer-2 scaling solutions such as Arbitrum and Optimism, which settle on Ethereum but generate a fraction of the fee revenue on the base layer. L2 networks now account for the majority of Ethereum-related transaction volume, compressing L1 fee generation even as total activity grows.

The disconnect raises questions about how value accrues to ETH as more activity shifts to L2 networks. If fee revenue continues to decline despite rising usage, the thesis that ETH captures value from network activity may require reassessment. The next catalyst is the Pectra upgrade, expected later this year, which aims to improve scalability and may further alter fee dynamics between L1 and L2.

CryptoQuant data shows altcoin selling pressure has outweighed buying demand for an extended period, with the cumulative buy-sell volume for altcoins hitting a new low. Altcoins accounted for 51% of daily futures trading volume on June 16, compared with 28.85% for Bitcoin and 20.20% for Ether, indicating capital recycling within the altcoin market rather than fresh spot inflows. Bitcoin dominance has risen to 58% of the total crypto market cap, according to CoinGecko, as investors rotated toward the largest digital asset during the broader market downturn.

Exchange stablecoin balances have remained largely unchanged since December 2024, with the ERC-20 stablecoin exchange supply ratio fluctuating between 0.40 and 0.46, according to CryptoQuant. This suggests deployable capital has stayed available but deployment has become increasingly selective. Binance alone held between 25% and 30% of the total stablecoin supply during the period.

The broader macro environment has added pressure. The Federal Reserve held rates at 3.50%-3.75% on June 17 and raised its inflation forecast, pushing expectations for rate cuts further out. Higher rates have historically weighed on risk assets, including cryptocurrencies. Bitcoin fell 2.2% to around $64,100 after the decision, while gold and silver also declined.

The ETH/BTC ratio has fallen to multi-year lows, reflecting Ethereum's relative underperformance against Bitcoin during the current cycle. Some analysts point to the Pectra upgrade as a potential catalyst to reverse the trend, though the timeline remains uncertain. Ethereum developers have indicated the upgrade could be deployed on the mainnet in the fourth quarter of 2026.

This article is for informational purposes only and does not constitute investment advice.