Ether (ETH) prices have skyrocketed 14.2% after rebounding from the $2,000 support level on March 4th, but they have struggled to maintain their level. In particular, ETH has dropped the broader cryptocurrency market by 11% over the past two weeks, reflecting investor uncertainty. Important obstacles need to be addressed to regain bullish momentum.
Ether/USD (left) vs. Total encryption limit, USD (right). Source: TradingView / Cointelegraph
While it is difficult to reduce ETH exposure to the exact reason behind traders, it is possible that several factors have contributed to weak emotions. These include reduced on-chain activity, lower total locked amounts (TVL), net positive ETH issues rates, and speculation surrounding potential US strategic digital asset reserves. Overall, Ethereum’s demand for ETH as a native token appears to be weak.
Weak on-chain activity, spot ETF spills, and concerns about increasing ETH supply
Ether Investors may be concerned about the growing likelihood of Solana (SOL) to secure approval for US Spot Exchange Trading Funds (ETFs), which could increase competition for facility capital. Currently, only Bitcoin (BTC) and ETH hold this status, but Ether ETF saw a net leak of $336 million between February 19th and March 4th.
Analyzing Ethereum’s on-chain metrics is essential to understand the key drivers behind Ether’s inadequate performance.
Distributed exchange volume for 7 days, USD. Source: Defilama
Ethereum Network maintained its leadership with a seven-day distributed exchange (DEX) volume, reaching $22.45 billion. However, the gap with its competitors narrowed, especially as Solana saw a 4% profit over the same period. According to Defilama data, Ethereum’s major weaknesses include a 49% reduction in curve finance activity and a 16% reduction in pendle volume.
Similarly, Ethereum’s locked total value (TVL) fell 13% in two weeks to $50.8 billion, raising concerns about whether ETH could outperform the broader cryptocurrency market in the short term. In comparison, BNB Chain’s TVL fell 8% over the same period, but was significantly smaller at $5.1 billion.
Ethereum Total Value Locked (TVL), USD. Source: Defilama
Uniswap is one of the weakest performers of Ethereum deposits, with total locked (TVL) down 22.5% over 30 days. Other notable reductions include Ether.fi (-18.8%), Lido (-17.3%), and Morpho (-17%).
The slowdown in Ethereum’s on-chain activity has created an extraordinary scenario where average trading fees fall below $1 for the first time since July 2020. However, the demand for blockchain processing remains weak, leading to an increase in ETH supply. The combustion mechanism introduced by EIP-1559 is largely offset by the increased Blob space for layer 2 scalability solutions.
Changes in ether supply over 30 days. Source: ultrasound.money
Related: Bitcoin is “highly likely to continue consolidation” during this pullback phase – Analyst
It remains to be seen whether future Pectra network upgrades will balance price distribution across the Ethereum ecosystem. However, further adjustments may be required later. Additionally, U.S. Secretary of Commerce Howard Lutnick reportedly confirmed that Bitcoin will receive “unique status” under Donald Trump’s plan.
On March 7th, the first White House Crypto Summit brings together representatives of the President’s Working Group on Digital Assets and top industry executives, founders and investors. They discuss the regulatory plan and the crypto strategic preparation proposed by Trump. Traders are currently worried that Ether is unlikely to be included as a major asset, which could limit the likelihood of ETH rising.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
