Source: Cointelegraph Original: "{title}"
Ethereum's price stabilized above the $2,000 support level on March 24, but it is still 18% lower than the $2,500 mark three weeks ago. Data shows that Ethereum's performance has lagged 14% behind the altcoin market over the past 30 days, leading traders to question whether Ethereum can regain upward momentum and to explore what factors might drive a trend reversal.
Ethereum/US Dollar (left) vs. Total Market Cap of Altcoins (USD) (right). Source: TradingView / Cointelegraph
Ethereum appears to be in a good position to attract institutional demand and significantly reduce the FUD (fear, uncertainty, and doubt) that has long limited its upside potential. Critics have long argued that the Ethereum ecosystem lags behind competitors in terms of overall user experience and still offers limited base-layer scalability, negatively impacting network fees and transaction efficiency.
Will the Pectra upgrade affect Ethereum's price?
Many challenges facing the Ethereum network are expected to be addressed in the upcoming Pectra network upgrade, scheduled for late April or early June. One of the proposed changes is that the amount of data that can be included in each block will double, which should help reduce fees for rollups and privacy-focused mechanisms. Additionally, the cost of calling data will increase, encouraging developers to adopt more efficient data storage methods—blobs.
Another notable improvement is the upcoming smart accounts, which will allow wallets to function like smart contracts during transactions. This will enable gas fee sponsorship, key authentication, and batch transactions. Furthermore, several other enhancements focus on optimizing staking deposits and withdrawals, providing greater flexibility, and expanding the block history data relied upon by smart contracts.
BitMEX co-founder Arthur Hayes set a price target of $5,000 for Ethereum on March 25, stating that Ethereum should significantly outperform its competitor Solana (SOL).
Source: CryptoHayes
Regardless of the reasoning behind Arthur's price prediction, Ethereum options traders do not share the same bullish sentiment. Call options expiring on September 26 with a strike price of $5,000 are priced at only $35.40, indicating a very low probability of success. However, Ethereum remains the undisputed leader in smart contract deposits and is the only altcoin in the U.S. with a spot exchange-traded fund (ETF), currently managing assets of $8.9 billion.
Ethereum TVL Growth and Exchange Ethereum Supply Decrease
The total value locked (TVL) in the Ethereum network reached $52.5 billion, far exceeding Solana's $7 billion. More importantly, deposits on the Ethereum network grew by 10% over the past 30 days, reaching 25.4 million ETH, while Solana saw an 8% decline during the same period. Some highlights for Ethereum include Sky (formerly Maker), which saw a 17% increase in deposits, and Ethena, whose TVL surged by 38% in 30 days.
Ethereum balances on exchanges. Source: Glassnode
According to Glassnode, as of March 25, the supply of Ethereum on exchanges was 16.9 million ETH, only 3.5% higher than the five-year low of 16.32 million ETH. This trend indicates that investors are withdrawing funds from exchanges, signaling a commitment to long-term capital. Similarly, the inflow of funds into spot Ethereum ETFs on March 24 and 25 was relatively muted, contrasting with a cumulative net outflow of $316 million since March 10.
Finally, the Ethereum network is gaining momentum in the real-world asset (RWA) sector, especially after the BlackRock BUILD fund surpassed a market cap of $1.5 billion. According to RWA.XYZ, the Ethereum ecosystem, including its layer two scalability solutions, accounts for over 80% of this market, highlighting Ethereum's dominance in the decentralized finance (DeFi) space.
The drop in Ethereum's price below $1,900 on March 10 may reflect overly pessimistic expectations. However, as the Ethereum network demonstrates resilience and traders continue to withdraw from exchanges, the market seems to have shifted, laying the groundwork for a potential rebound to $2,500.
Related: Bitcoin and Ethereum are expected to incur losses in the first quarter, with a "vertical upward" trend unlikely to occur.
This article is for general informational purposes only and should not be considered legal or investment advice. The views, thoughts, and opinions expressed in the article are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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