Ethereum's reliance on Layer-2 (L2) solutions contributed to $ETH's inflation.

CryptoQuant analyst Burak Kesmeci revealed the amount of $ETH held in accumulation addresses has risen from 11.5M in January to 19M. Compared to last year, it has doubled.

Why is $ETH struggling to rebound to its former high, and should we expect another downturn? Let's take a closer look at technical indicators and ecosystem updates.

A failure to break above the $2,760 resistance level on Monday caused $ETH to drop to $2,634. The last time it was trading at this price was in August.

The current price is below $ETH's 100-day SMA of $2,682.7, which suggests that $ETH stepped on the path of correction - at least in the short term.

Another bearish indicator is a break below the $2,680 support line on the hourly $ETH/USD chart.

Neutral oscillators further highlight $ETH's indecisiveness. Given the mixed SMAs and a flat Ichimoku Cloud, the long-term direction is equally unclear.

$ETH must clear the new $2,680 resistance zone in the upcoming days to prevent further decline. If it fails, it could find initial support around $2,625.

$ETH experienced multiple moderate drops throughout the year and tanked in July following the approval of $ETH ETFs. Subpar performance of $ETH ETFs compared to similar $BTC products may be to blame.

Besides, Ethereum heavily relies on L2 solutions for scaling. Despite achieving the key objective, the rise of L2s negatively affected $ETH's burn mechanism.

While $ETH has seen an increase in its accumulation addresses, its price performance is concerning.

Inflation triggered by reliance on L2s appears to be the main cause of $ETH's downward trend. Unless Ethereum resolves this issue, its price is likely to remain stagnant.