Ethereum (ETH), a prominent cryptocurrency and blockchain platform, has demonstrated a correlation with Bitcoin’s price movements this year, despite variations in returns. While the recent golden cross between the 50 and 200 Moving Averages (MA) on the weekly timeframe suggests a bullish outlook and a potential rally in the near future, the fundamental factors within the on-chain Ethereum ecosystem present a different narrative.

The on-chain fundamental factors of Ethereum reveal a more complex picture. Despite its significant market capitalization of over $222 billion, Ethereum has experienced a decline in its total value locked (TVL) throughout the year, according to data from Defilama. The current TVL stands at approximately $26.16 billion, with stablecoins representing about $69 billion in market capitalization.

Additionally, Ethereum’s network revenue has been steadily decreasing and is currently below 1,000 ETH per day. This decline in network revenue indicates a decrease in on-chain activity, particularly in the decentralized finance (DeFi) sector.

The decline in Ethereum’s on-chain activity coincides with a worrisome global economic outlook. Leading economists, such as those at HSBC Asset Management, warn of recession signals in several economies, while fiscal and monetary policies appear disconnected from stock and bond markets. The International Monetary Fund’s first deputy managing director, Gita Gopinath, highlights the importance of central banks implementing monetary tightening policies, including higher interest rates, to address inflation concerns.

While technical analysis suggests a potential bullish future for Ethereum’s price, the on-chain metrics raise concerns. The decline in total value locked and network revenue indicates a decrease in DeFi activity amid a challenging global economic landscape. As Ethereum navigates these complexities, market participants will closely monitor both technical indicators and fundamental factors to gain insights into its future trajectory.