Ether, having plummeted to its lowest in 17 months, now faces the challenge of regaining momentum, as it demands a 29% rise to hit $2,500. This recovery is conditional on macroeconomic factors, but Ethereum’s strengthening onchain metrics suggest a bullish future.
Between March 8 and March 11, Ether declined by 13% as investors sought refuge in fixed-income assets and cash amidst a global tariff confrontation. To reach $2,500 from its current $1,940, increased demand from leveraged traders, who are currently at a five-month low, is essential. The annualized premium for ETH futures has fallen to 4.5%, indicating a subdued bullish sentiment.
The market downturn was exacerbated by excessive optimism, leading to the liquidation of $235 million in long positions. Despite this, onchain metrics and derivatives indicate potential recovery. The layer-2 network’s expansion demonstrates resilience, with Ethereum now trading significantly below its November 2021 peak.
Ether’s market decline stems from competition in the smart contract space and decreased demand for applications such as NFTs and Web3 projects. However, network efficiency has improved, as evidenced by a drop in transaction costs and increased layer-2 activity. While most transactions come from bots, genuine activity on layer-2 networks substantially surpasses that on Ethereum’s base layer.
Ethereum has regained its position as a leader in decentralized exchange volume, with TVL in smart contracts reaching 24 million ETH, illustrating a 10% growth in recent weeks. This surge is fueled by liquid staking and yield farming activities. With Ethereum ETFs established and competitors awaiting approval, Ethereum holds a critical advantage.
While Ether’s future depends on broader economic conditions, improved sentiment and increasing investment in its layer-2 solutions and decentralized exchanges suggest that the cryptocurrency is poised to reclaim the $2,500 level as a pivotal support, assuming external economic stability.
