Ether ( ETH ) price rose to $2,700 on Oct. 30, marking its highest level in ten days, but a strong rejection on Oct. 31 pushed its price down to $2,550. This movement mirrored Bitcoin ( BTC ), which saw a 4% decline from its peak of $73,575 on Oct. 29.

Traders are now pondering what it would take for Ether to reclaim the $3,000 mark. The answer likely lies in a combination of reduced transaction fees, greater institutional adoption, and enhanced incentives for ETH staking.

Ethereum price rally to $3K depends on a few key factors image 0

Source: JoeConsorti

Joe Consorti, a Bitcoin advocate and builder at Theya Inc., pointed out that spot Ethereum exchange-traded funds (ETFs) in the United States have failed to capture investor interest, while similar Bitcoin instruments attracted $3.3 billion in inflows in just one week.

Ethereum is losing market share, and native staking is declining

Attributing Ether's inability to trade above $2,700 solely to weak institutional demand is misguided; this is more a consequence than a cause. For instance, Solana has overtaken Ethereum as the leading blockchain in decentralized application (DApp) transaction volumes.

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Decentralized exchanges volume by chain, weekly. Source: DefiLlama

Recent data shows Solana leading in decentralized exchange (DEX) volumes, but critics argue that its network heavily relies on memecoin trading activity, which spiked in October. In contrast, Ethereum sustains robust demand from well-established decentralized finance (DeFi) applications like Balancer, Curve, Pendle, and Ether.fi.

Ethereum continues to dominate when layer-2 volumes are aggregated, including networks like Base, Arbitrum, Polygon, and Avalanche. This dominance is also evident in total value locked (TVL), where Ethereum's base layer holds $48.8 billion compared to Solana's $6.27 billion. Therefore, even if the memecoin craze persists, it represents only a small segment of the broader DApps market.

Despite a robust $116 billion in onchain DApp volume over 30 days, according to DappRadar, Ethereum's transaction fees have remained stagnant. StakingRewards data indicates a 3.4% reward rate for ETH staking, in contrast to Solana's 6.5% and Tron's 4.5%. As a result, Ethereum has seen a net withdrawal of 180,000 ETH from staking over the same period.

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Top blockchains staking data. Source: StakingRewards

Ethereum developers are addressing this concern with the upcoming Ethereum Improvement Proposal EIP-7742, which will introduce dynamic blob (temporary data layer) costs and maximum values. Vitalik Buterin has discussed the transition from a fixed blob count, warning that constant operation at full capacity could hinder scalability.

The anticipated Ethereum Pectra upgrade , slated for the first quarter of 2025, aims to expand the maximum block size to 2.7 megabytes from the current 1 megabyte, as outlined in EIP-7623. The ongoing debate centers around how to reconcile the demand for low-cost transactions with the need to adequately reward ETH staking.

Related: Ethereum ‘final dip’ to $2.5K likely before ETH treks to new all-time high — Analyst

Ether’s journey to a $3,000 valuation heavily relies on institutional adoption, hindered in part by the stringent policies of the US Securities and Exchange Commission, which has blocked requests for spot Ethereum ETFs that would employ staking strategies. Conversely, Bitcoin’s stringent monetary policy has resonated with some of the world’s largest professional investors.

Once hailed as "ultrasound money" by its supporters, the Ethereum network now faces challenges with increasing supply and over-optimization for layer-2 activities, which, while operationally beneficial, might compromise security sustainability. Therefore, a sustainable ETH price rally could hinge on significant modifications to the network's structure.