Ethereum Faces "Hellish Hyperinflation Zone": Secrets Behind the Collapse Revealed

One day after falling 4%, Ethereum (ETH) is currently trading around $1,800, indicating a poorer performance compared to the overall cryptocurrency market. Although the cryptocurrency market started this year positively, ETH is still struggling to maintain its growth momentum. Since falling below the $3,000 level, the value of Ethereum has continuously slid and broken through the $2,000 support zone, indicating that demand and market sentiment are significantly declining. While Bitcoin and other major digital assets have recovered in recent weeks, Ethereum is struggling with a decrease in network activity and weak on-chain fundamentals. This difference has raised concerns about the short-term prospects of ETH and prompted a new assessment of the factors affecting its performance. Network activity is declining and revenue fees are plummeting, putting pressure on inflation. The researcher EgyHash from CryptoQuant has published a study on on-chain metrics, which indicates that the decline in the value of Ethereum is closely related to the collapse of the fee economy and the level of user interaction on the network. According to an analysis titled "Why Ethereum is Losing Value: The Collapse of Fees Faces a Hellish Hyperinflation Zone," the Ethereum network is currently recording the lowest activity levels since 2020. Since the beginning of 2025, the number of daily active addresses has sharply declined continuously, while the average transaction costs have hit historic lows. The ETH burn rate – a mechanism that helps curb inflationary pressure after Ethereum transitioned to a proof-of-stake mechanism – has also significantly decreased due to this decline in network activity. The Dencun upgrade, which was expected to improve network performance, coincided with the prolonged low transaction volume. This has reduced revenue from transaction fees while increasing the net issuance of ETH, pushing the network into a state of rising inflation. Technical outlook: A slim hope amid difficulties Although Ethereum is facing significant challenges from on-chain data, some technical experts remain cautiously optimistic. A technical trader named Trader Courage on the X platform believes that Ethereum is currently testing an important support zone and has the potential to recover to higher levels within its trading range. Meanwhile, the CryptoElite expert notes that ETH is still respecting a long-term upward trendline. Based on this model, the expert believes that if market conditions improve, Ethereum could reach $10,000 by the end of this year. Conclusion Currently, Ethereum is at a critical crossroads. The fall in network activity and fee revenue is creating significant inflationary pressure, causing its value to plummet. However, technical factors indicate that there is still hope for a recovery if the overall market improves. Investors need to closely monitor both on-chain data and technical signals to accurately assess the next direction of Ethereum in this challenging context.