Ethereum (ETH) Price Stagnates Below $2.2K: Key Factors Behind the Struggle

Ethereum (ETH) has recently faced significant challenges, with its price hovering below the crucial $2,200 mark. After a notable surge of 14.2% from the $2,000 support level on March 4, ETH has struggled to maintain its momentum. This underperformance is evident as it lags behind the broader cryptocurrency market by 11% over the past two weeks, raising concerns among investors.

Understanding the Current Market Sentiment

To regain bullish momentum, Ethereum must address several key obstacles. While pinpointing the exact reasons for reduced ETH exposure among traders is complex, several factors likely contribute to the prevailing weak sentiment. These include:

Declining on-chain activity
Lower total value locked (TVL)
Net positive ETH issuance rate
Speculation surrounding potential US strategic regulations

Overall, the demand for ETH, as Ethereum’s native token, appears to be waning. Investors are particularly concerned about the increasing likelihood of Solana (SOL) securing approval for spot exchange-traded funds (ETFs) in the US, which could intensify competition for institutional capital. Currently, only Bitcoin (BTC) and ETH hold ETF status, yet Ether ETFs experienced a staggering $336 million in net outflows between February 19 and March 4.

Ethereum’s Performance in the Decentralized Exchange Market

Despite these challenges, the Ethereum network has maintained its leadership in 7-day decentralized exchange (DEX) volume, reaching an impressive $22.45 billion. However, the gap with competitors is narrowing, particularly as Solana recorded a 4% gain during the same period. Key weaknesses for Ethereum include:

A 49% drop in activity on Curve Finance
A 16% decline in Pendle volumes

According to DefiLlama data, Ethereum’s total value locked (TVL) fell by 13% over two weeks, settling at $50.8 billion. This decline raises concerns about whether ETH can outperform the broader cryptocurrency market in the near term. In comparison, BNB Chain’s TVL also declined by 8% during the same period, though it remains significantly smaller at $5.1 billion.

Declining Activity and Transaction Fees

Uniswap, one of the leading decentralized exchanges, has been among the weakest performers in Ethereum deposits, with its total value locked (TVL) dropping by 22.5% over the past 30 days. Other notable declines include Ether.fi (-18.8%), Lido (-17.3%), and Morpho (-17%).

The slowdown in Ethereum’s on-chain activity has created an unusual scenario where average transaction fees have fallen 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 burn mechanism introduced by EIP-1559 has been largely offset by the expansion of blob space for layer-2 scalability solutions.

Future Outlook for Ethereum

Whether the upcoming ‘Pectra’ can effectively balance fee distribution across the Ethereum ecosystem remains uncertain. More adjustments may be necessary to restore investor confidence. Additionally, US Commerce Secretary Howard Lutnick has reportedly confirmed a “unique status” under Donald Trump’s plans for cryptocurrency regulation.

On March 7, the first White House meeting will convene top industry executives, founders, and investors alongside representatives from the president’s working group on digital assets. They will discuss regulatory plans and Trump’s proposed crypto strategic reserves. Traders are now concerned that Ether may have a low chance of being included as a leading asset, which could further limit ETH’s upside potential.

This article is for general information purposes and is not intended to be taken as legal or investment advice. The views, thoughts, and opinions expressed here are based on current market conditions and may change.

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