Ethereum's Price Volatility: A Breakout or a Liquidity Trap?

Ethereum's price has been swinging wildly, leaving traders uncertain about its future trajectory. The cryptocurrency is being influenced by several key factors, including the expansion of layer-2 ecosystems such as Arbitrum and Optimism, which are reducing gas fees and increasing on-chain activity.

However, this growth also raises concerns that Ethereum may be cannibalizing its own activity, with some traders fearing a liquidity trap. On the other hand, the potential for Ethereum to become a settlement layer is driving up demand, and the upcoming Pectra upgrade could further enhance scalability and decentralization.