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Ether (ETH) price dropped below $2,600 on Feb. 24 and has since struggled to sustain a meaningful recovery. The latest correction toward the $2,000 level triggered over $918 million in leveraged long (bull) liquidations in ETH futures within 15 days, according to CoinGlass data.
Traders now question what needs to happen for ETH to break above $2,500.
Ether/USD (left) vs. total altcoin market cap (right). Source: TradingView / Cointelegraph
Ether has underperformed the altcoin market by 10% during this period, as shown in the chart above.
More concerningly, this decline followed a memecoin frenzy that boosted Ethereumβs main competitor, Solana (SOL). This suggests that additional factors are hampering ETHβs price, and four major issues need to be addressed before Ether can reclaim a bull market.
Ethereumβs upgrades and increased competition
For some, the upcoming Pectra upgrade on the Ethereum network falls short of what is needed to drive a meaningful turnaround, whether it lowers base-layer transaction fees or significantly enhances usability.
Even if the changes do improve the user experience, analysts argue that Ethereum still lacks interoperability across different layer-2 solutions, both in terms of liquidity and user accessibility.
Recent reports of empty blocks on the Ethereum testnet have added to risk perception at a time when investors were already skeptical. Regardless of whether this issue is unrelated to the upcoming upgrade or easily fixable, some traders worry that any potential delay could be perceived negatively by the market.
In essence, fear remains the dominant sentiment, and for this to change, several pressing issues must be resolved.
Critics argue that part of ETH investorsβ disappointment stems from the rise of indirect competitors, such as the modular layer-1 Berachain, which focuses on integrating liquidity and governance for decentralized finance (DeFi) applications.
7-day protocol fees ranking, USD. Source: DefiLlama
Berachain has successfully captured over $3 billion in deposits, as measured by total value locked (TVL) on DefiLlama.
Similarly, Hyperliquid, a perpetual futures application hosted on its own blockchain, has surpassed $2.8 billion in open interest, outpacing competitors on the Ethereum network. In many ways, competition is growing beyond the traditional model.
For ETH's price to regain bullish momentum, traders need reassurance that the Ethereum network offers practical and clear advantages for its projects and users. Ultimately, Ethereum's focus on decentralization and incremental improvementsβwhether justified or notβcould be stemming demand compared to its competition.
Weak onchain activity and institutional demand
The lack of demand from institutional investors is evident in the spot exchange-traded fund (ETF) flows, which were negative in nine of the last 10 trading days, resulting in $406 million in net withdrawals.
Some analysts suggested that demand could surge following the eventual approval of native staking on Ethereum ETFs, but this theory is now less certain, given that the ETH supply is increasing at 0.7% annually.
Lower demand for blockchain processing has reduced the burn-fee mechanism, causing Ether to become inflationary. As a result, the adjusted native staking reward is now below 2.5%, while deposits in stablecoins yield up to 4.5% in most DeFi projects.
Ultimately, the eventual inclusion of staking in spot ETFs is unlikely to be a game-changer for institutional demand.
Related: DeFi TVL drops by $45B, erasing gains since Trump election
Lastly, traders are concerned that the US Securities and Exchange Commission may approve a spot Solana ETF in 2025, creating direct competition for investors who currently only have access to Ether and Bitcoin (BTC) ETF products.
Therefore, for ETH price to reach $2,500 and beyond, investors need clearer evidence that Ethereum offers sustainable advantages beyond its first-mover advantage.
In summary, Etherβs future depends on Ethereum network upgrades, increased network usage, a subsequent decline in supply, and reduced friction for layer-2 interoperability, ensuring that the entire ecosystem benefits from its growth.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the authorβs alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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