Ethereum Struggles Under $2,300 as Pectra Upgrade Hits Second Testnet Snag
Ethereum (ETH) rebounded 5.6% to $2,280 in the past 24 hours but continues to underperform Bitcoin’s gain past $91,000 amid persistent technical challenges and declining network metrics. ETH/USD has lost 11% against the broader crypto market over two weeks, with analysts pointing to specific concerns about its technical upgrade path and deteriorating fundamentals.
Pectra Upgrade’s Testnet Issues Raise Deployment Concerns
Ethereum’s Pectra upgrade—its most important since 2024—saw its second consecutive testnet failure on Wednesday after a deposit contract flaw caused empty blocks during Sepolia deployment. This also applies to the last week’s Holesky testnet issue brought on by improperly configured validators.
Christine Kim, VP of research at Galaxy Digital, advised developers to “set up additional testing infrastructure” before moving forward with the April mainnet deployment. “I do think the incidents on both the Holesky and Sepolia testnets warrant a delay to Pectra mainnet activation,” Christine Kim, told CoinDesk.
Defending the effort in a blog post, Ethereum core developer coordinator Tim Beiko said, “This issue is due to Sepolia’s configuration and could not occur on the Ethereum mainnet.” Meeting on March 7, developers will decide whether to move on with the intended April launch.
Pectra aims to introduce critical features including:
- Consolidation of staking positions from 32 ETH to 2,048 ETH per validator
- Account abstraction enabling ERC-20 gas payments and sponsored transactions
- Enhanced wallet recovery functionality
Market Context: China Stimulus and Trade Relief Provide Support
More general crypto gains have come from:
- Temporary U.S. tariff exemptions for Mexico and Canada
- China announcing increased fiscal stimulus and infrastructure spending
- Premier Li Qiang acknowledging “an increasingly complex and severe external environment”
“The tariff talks are driving the dollar, interest rates, and oil lower, easing financial conditions,” explained Juan Leon, Senior Investment Strategist at Bitwise Asset Management. “On top of that, China just announced more stimulus. All of that is providing ammunition for crypto to rally.”
White House Crypto Summit May Favor Bitcoin
The declaration by Howard Lutnick, the Secretary of Bitcoin Commerce, that Bitcoin would have “unique status” in Trump’s suggested strategic reserve begs questions regarding Ethereum’s presence. Lutnick told The Pavlovic Today, “A Bitcoin strategic reserve is something the President’s interested in,” adding other cryptocurrencies would be “treated differently.”
Though Singapore-based QCP Capital cautioned in a market note: “Without any real presidential orders, financing promises, or congressional backing in place, the market remains in wait-and-see mode… The first White House Crypto Summit set for March 7 may offer better direction. Investors see this as a high stakes asymmetric event.
Ethereum’s Network Activity Collapses Amid Rising Competition
Ethereum’s dominance in decentralized finance is eroding across multiple metrics:
- Transaction fees: Sub-$1 average fees for the first time since July 2020
- Total Value Locked: 13% decline in two weeks to $50.8 billion, compared to BNB Chain’s smaller 8% drop
- Protocol-specific losses: Uniswap TVL down 22.5%, Ether.fi down 18.8%, Lido down 17.3%
- ETF outflows: $336 million withdrawn from Ethereum ETFs (Feb 19 – Mar 4)
While Ethereum maintains $22.45 billion in 7-day DEX volume, competitors are gaining ground, with Solana posting a 4% gain over the same period. Curve Finance activity on Ethereum plummeted 49%, while Pendle volumes fell 16%.
Supply Inflation Resumes as ETH Burn Mechanism Weakens
Collapsed network demand has reversed Ethereum’s deflationary mechanism, resulting in net positive issuance even with the EIP-1559 burn mechanism. Blob space expansion for layer-2 solutions has further muddied ETH’s scarcity narrative relative to Bitcoin’s post-halved supply drop.
ETH/USD Technical Analysis: Bearish “Double Top” as Liquidations Mount
With price action creating a typical “double top” pattern on weekly and monthly charts, ETH’s technical picture has gotten really bad. Combining this bearish setup with ETH breaking below its 980-day uptrend support, crypto expert Nebraskangooner forecasts a possible objective of $1,200—42% below present prices.
The altcoin briefly touched $1,996 on March 4, triggering:
- $100 million in position liquidations
- 10.31% decline in futures open interest
- ETH’s lowest price since November 2023
On-chain data from IntoTheBlock shows severe investor pain:
- Only 26% of addresses (holding 36.92 million ETH) remain in profit
- 70% of addresses are underwater on their investments
- ETH has declined 50% in just 78 days (Dec 1, 2024 – Mar 4, 2025)
Ethereum Outlook: Key Catalysts to Watch
Ethereum’s recovery hinges on three immediate catalysts:
- March 7 Core Developer Meeting: Will determine if Pectra proceeds or faces delays
- White House Crypto Summit: Could clarify Ethereum’s role in regulatory framework
- Technical Support at $2,200: Critical price level that must hold to prevent cascade to $1,500
With 70% of investors underwater and multiple negative indicators converging, Ethereum faces its most challenging market position since November 2023, requiring significant fundamental improvements to reverse its underperformance against Bitcoin and the broader market.
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