Ethereum is experiencing significant challenges as usage declines and core metrics hit multi-year lows. Institutional investors like Galaxy Digital and Paradigm are reducing their Ether holdings, with Galaxy recently transferring over 65,000 ETH to Binance, dropping its total from approximately 98,000 to 68,000 ETH. CoinShares reported significant outflows from ETH funds, totaling $772 million over eight weeks, despite positive year-to-date flows of $215 million. Meanwhile, Paradigm reduced its holdings to 2,873 ETH from about 236,000 ETH in 2019. The transition to a proof-of-stake network initially led to deflation, but Ether supply has now become inflationary due to falling transaction fees. Vitalik Buterin's recent proposal to overhaul Ethereum's execution language indicates acknowledgment of limits within its existing architecture. Ethereum's focus on layer-2 solutions has created fragmentation and reduced base layer fee revenues. Despite these challenges, some large investors are buying at lower prices, anticipating future gains, though analysts have lowered Ether price forecasts.

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