Between March 8 and 11, Ethereum (ETH) experienced a 13% decline, with its price dropping to $1,744. The correction was largely driven by macroeconomic uncertainty, including trade tensions between the US and Canada and investors shifting towards lower-risk assets. Despite this downturn, Ethereum‘s fundamentals remain strong, and indicators suggest a possible recovery.

Ethereum Needs a 29% Increase to Reclaim $2,500

Currently, ETH is trading around $1,940. To reach the psychological threshold of $2,500, a 29% price increase is required. This would likely demand higher demand from leveraged traders, but leveraged positions are currently at their lowest point in five months.

Historical market trends show that ETH often recovers faster than other risk assets when market sentiment improves. Some analysts link crypto price movements to inflation and economic growth, while others emphasize the impact of liquidity injections and monetary easing.

Ethereum Futures Indicate Weak Bullish Sentiment

ETH futures provide insight into institutional investor sentiment. In neutral markets, traders typically expect a 5% to 10% annualized premium on futures. Currently, this premium is only 4.5%, signaling weak buying pressure.

Excessive optimism also contributed to the recent price decline. Between March 10 and 11, $235 million in long positions were liquidated, triggering panic selling and pushing ETH down to $1,744, its lowest level since October 2023.

Ethereum‘s Layer-2 Adoption Continues to Grow

Although ETH is currently trading 60% below its all-time high of $4,868 in November 2021, the Ethereum network has made significant progress in recent years. Layer-2 solutions like Arbitrum, Optimism, Base, ZKsync, and Blast are driving a massive surge in network activity.

One major improvement since 2021 is the reduction in transaction fees. Back then, the average transaction fee exceeded $50, whereas on March 11, 2025, a token swap on Ethereum‘s base layer cost just $1.70. Even though bots account for about 80% of layer-2 transactions, overall network activity is three times higher than Ethereum‘s base layer.

Ethereum Regains DeFi Leadership: TVL and DEX Volume Surge

Ethereum remains the dominant player in decentralized finance (DeFi). The network has reclaimed its position as the leading decentralized exchange (DEX) platform, with $20.5 billion in trading volume over seven days. In comparison, Solana, an emerging competitor, recorded $13.9 billion in the same period.

Additionally, Ethereum‘s total value locked (TVL) in smart contracts has risen to 24 million ETH, the highest level since July 2022. This growth is primarily driven by liquid staking, yield farming, and the tokenization of real-world assets.

Institutional interest in Ethereum is also increasing. The network is being viewed as an attractive investment opportunity, partly due to the $8.9 billion currently held in Ethereum-related exchange-traded funds (ETFs). This gives ETH a competitive edge over blockchains like Solana, which are still awaiting approval for similar ETF products.

ETH Price Outlook: Potential Recovery Towards $2,500

Despite the recent dip, Ethereum‘s long-term potential remains strong. The combination of rising DeFi activity, improved scalability through layer-2 networks, and growing institutional adoption provides a positive outlook for ETH‘s price.

However, like the broader crypto market, ETH remains highly dependent on macroeconomic factors such as inflation, interest rates, and market liquidity. If the macroeconomic environment stabilizes, Ethereum has a solid chance to retest the $2,500 level in the coming weeks.