- Ethereum is struggling below $2,300 as its Pectra upgrade faces repeated testnet failures, raising concerns about potential deployment delays and weakening investor confidence.
- Additionally, Ethereum’s network activity and market dominance are declining, with bearish technical indicators suggesting a possible drop to $1,200 if key support levels fail.
Ethereum (ETH) continues to struggle below the $2,300 mark despite a recent 5.6% rebound to $2,280. The cryptocurrency is underperforming Bitcoin, which has surged past $91,000, as concerns over Ethereum’s technical challenges and declining network activity persist. The ongoing setbacks surrounding its Pectra upgrade are adding to investor unease.
Pectra Upgrade Faces Another Testnet Failure
Ethereum’s much-anticipated Pectra upgrade encountered another roadblock on the Sepolia testnet due to a deposit contract flaw. This follows last week’s Holesky testnet issue, which arose from improperly configured validators. The repeated failures have raised concerns about the upgrade’s readiness for its scheduled April deployment.
Christine Kim, VP of research at Galaxy Digital, suggested that developers should implement additional testing measures before moving forward. She warned that these incidents could justify delaying the mainnet activation. However, Ethereum core developer Tim Beiko defended the project, stating that the Sepolia issue was configuration-related and unlikely to occur on the Ethereum mainnet. A final decision on the April launch is expected during the March 7 developer meeting.
The Pectra upgrade is designed to introduce key features such as:
- Consolidation of staking positions from 32 ETH to 2,048 ETH per validator
- Account abstraction allowing ERC-20 gas payments and sponsored transactions
- Enhanced wallet recovery mechanisms
Market Context: External Factors Supporting Crypto Gains
While Ethereum grapples with technical issues, broader market factors have provided temporary support for the crypto industry. Recent developments, such as U.S. tariff exemptions for Mexico and Canada and China’s increased fiscal stimulus, have contributed to easing financial conditions.
According to Juan Leon, Senior Investment Strategist at Bitwise Asset Management, “Lower interest rates, a weaker dollar, and China’s stimulus measures are creating a more favorable environment for risk assets, including crypto.” However, Ethereum has not capitalized on these positive factors as much as Bitcoin.
Ethereum’s Declining Network Activity and Market Position
Ethereum’s position in decentralized finance (DeFi) is weakening as key metrics decline:
- Transaction fees have dropped below $1 for the first time since July 2020
- Total Value Locked (TVL) has fallen by 13% in two weeks, now at $50.8 billion
- Ethereum ETFs saw $336 million in outflows between February 19 and March 4
- Competitor gains: Solana saw a 4% increase in market share, while Ethereum’s Curve Finance activity plummeted by 49%
Ethereum’s once-deflationary tokenomics are also reversing. Lower network demand has reduced the effectiveness of ETH’s burn mechanism, leading to net positive issuance. With Bitcoin’s upcoming halving event expected to tighten its supply further, Ethereum’s inflationary shift could put it at a disadvantage.
Bearish Technical Outlook and Investor Concerns
Ethereum’s price chart suggests a bearish trend, with a double-top pattern and a break below a long-term uptrend. Crypto analyst Nebraskangooner has warned of a potential drop to $1,200—42% below current levels—if critical support fails.
Other troubling signals include:
- $100 million in liquidations when ETH briefly dipped to $1,996 on March 4
- 70% of ETH holders are currently at a loss
- Futures open interest declined by 10.31%
Key Catalysts to Watch
Ethereum’s recovery depends on three key factors:
- March 7 Developer Meeting: A decision on whether to proceed with the Pectra upgrade or delay it further
- White House Crypto Summit: Potential regulatory clarity on Ethereum’s status compared to Bitcoin
- Technical Support at $2,200: Holding this level is critical to prevent further downside toward $1,500
With mounting technical and market pressures, Ethereum faces one of its most challenging periods since November 2023. Unless significant improvements materialize, ETH may continue to underperform Bitcoin and other competitors in the evolving crypto landscape.
