Source: Cointelegraph Original: "{title}"
On February 24, the price of Ethereum fell below $2,600 and has since struggled to achieve a meaningful recovery. According to CoinGlass data, the recent price pullback towards the $2,000 level triggered the liquidation of over $918 million in leveraged long positions in Ethereum futures within 15 days.
Traders are now contemplating what conditions Ethereum needs to break through the $2,500 mark.
Ethereum/USD (left) vs. total market cap of altcoins (right). Source: TradingView / Cointelegraph
As shown in the chart above, during this period, Ethereum's performance lagged behind the altcoin market by 10%.
More concerning is that prior to this price drop, there was a surge in meme coins, which propelled the growth of Ethereum's main competitor—Solana (SOL). This indicates that there are other factors hindering Ethereum's price increase, and four major issues need to be addressed before Ethereum can return to a bull market.
Ethereum's upgrades and increasing competition
For some, the upcoming Pectra upgrade of the Ethereum network has not reached the level necessary to drive significant change, whether in reducing base layer transaction fees or significantly enhancing usability.
Even if these changes do improve user experience, analysts still believe that Ethereum lacks interoperability among different layer two solutions, both in terms of liquidity and user accessibility.
Amid existing investor skepticism, recent reports of empty blocks appearing on the Ethereum testnet have further heightened risk perception. Regardless of whether this issue is related to the upcoming upgrade or whether it is easily resolvable, some traders are concerned that any potential delays could be negatively interpreted by the market.
Essentially, fear remains dominant, and several urgent issues must be resolved to change this situation.
Critics argue that part of the disappointment among Ethereum investors stems from the rise of indirect competitors, such as the modular layer one blockchain network Berachain, which focuses on integrating liquidity and governance features for decentralized finance (DeFi) applications.
7-day protocol fee rankings, in USD. Source: DefiLlama
According to the total value locked (TVL) on DefiLlama, Berachain has successfully attracted over $3 billion in deposits.
Similarly, the perpetual futures application Hyperliquid, running on its own blockchain, has an open contract value exceeding $2.8 billion, surpassing its competitors on the Ethereum network. In many ways, competition has moved beyond traditional models.
For Ethereum's price to regain bullish momentum, traders need assurance that the Ethereum network can provide tangible and clear advantages for its projects and users. Ultimately, Ethereum's focus on decentralization and incremental improvements—whether justified or not—may be suppressing demand compared to its competitors.
Weak on-chain activity and insufficient institutional demand
The lack of institutional investor demand is evident from the fund flows of spot ETFs. In the past 10 trading days, there were negative fund flows on 9 days, resulting in a net redemption of $406 million.
Some analysts had previously believed that demand could surge significantly after the approval of Ethereum's native staking ETF, but considering that Ethereum's supply is growing at a rate of 0.7% per year, this theory has become less certain.
The reduced demand for blockchain processing has weakened the effectiveness of Ethereum's burning fee mechanism, leading Ethereum into an inflationary state. Consequently, the adjusted native staking rewards are currently below 2.5%, while in most decentralized finance projects, stablecoin deposit yields can reach up to 4.5%.
Ultimately, the inclusion of staking features in spot ETFs is unlikely to be a key factor in changing institutional demand.
Therefore, for Ethereum's price to reach $2,500 or higher, investors need clearer evidence that Ethereum can provide sustainable advantages beyond its first-mover advantage.
In summary, Ethereum's future depends on the upgrades of the Ethereum network, an increase in network usage, a subsequent decrease in supply, and a reduction in friction regarding layer two network interoperability to ensure that the entire ecosystem can benefit from its development.
This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in this article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。
