Ethereum is back in the spotlight after four consecutive months of declines, prompting questions about its future direction. Analysts are divided, with expectations of either significant gains or further losses.
Ethereum Battles for Support as Whale Activity Waned
Ethereum's price closed March down 18.47%, marking its worst quarterly performance since 2022. The asset trades near $1,878 as of April 2. Leading trader Merlijn The Trader noted that the current support level is the same that triggered the 2021 bull run, stating: “Hold it, and $10K is in play. Lose it… and things get ugly.” Meanwhile, analyst Ali highlighted a sharp drop in whale activity, reporting a 63.8% decline in large Ethereum transactions since February 25. Revenue from fees also fell to $22 million in March, the lowest since June 2020, reflecting a decrease in network demand.
ETH/BTC Decline and Solana's Increasing Share
The ETH/BTC ratio dropped to 0.021 on March 30, hitting a five-year low. Analyst VentureFounder suggested that the ratio may be bottoming but warned of further downside before any rebound occurs. Ethereum's dominance in decentralized finance fell from $59 billion in February to $50.5 billion in early April. Comparatively, Solana's share rose from 2.84% to 7.24% in the same period, as traders moved to faster, cheaper alternatives.
ETF Flows, Gas Usage, and L2 Migrations Affect Ethereum
Ethereum ETFs failed to attract new capital, with flows declining by 9.8% in March to $2.43 billion. Despite a reduction in gas fees to 1.12 GWEI, mainnet activity has not rebounded. Bots now dominate gas usage across major contracts, indicating reduced organic engagement. Milocredit noted that Ethereum's mainnet is losing relevance as activity shifts to layer-2 solutions like Arbitrum, Optimism, and Base. Geoff Kendrick of Standard Chartered estimated that Base alone has redirected $50 billion in potential market cap away from Ethereum by reallocating fee flows.
Historical data suggests that Ethereum often forms short-term bottoms following several months of declines. However, macroeconomic risks, including its correlation with risk assets, pose uncertainty for the cryptocurrency's future price movements.
