Ethereum Drops 10% Amid Upgrade Concerns, Competitor Gains

Ethereum's price has been struggling to reclaim the $2,600 mark since its drop below this level on February 24. The recent correction towards the $2,000 level has triggered significant liquidations in ETH futures, raising questions about what needs to happen for Ethereum to break above $2,500.

Ethereum has underperformed the altcoin market by 10% during this period, and the decline followed a memecoin frenzy that boosted Solana, Ethereum’s main competitor. This suggests that additional factors are hampering ETH’s price, and four major issues need to be addressed before Ether can reclaim a bull market.

Firstly, the upcoming Pectra upgrade on the Ethereum network may not be sufficient to drive a meaningful turnaround. While the upgrade aims to lower base-layer transaction fees and enhance usability, analysts argue that Ethereum still lacks interoperability across different layer-2 solutions. Recent reports of empty blocks on the Ethereum testnet have added to risk perception, with traders worrying about potential delays in the upgrade.

Secondly, competition from indirect competitors like Berachain and Hyperliquid is growing. Berachain has captured over $3 billion in deposits, and Hyperliquid has surpassed $2.8 billion in open interest. For ETH's price to regain bullish momentum, traders need reassurance that the Ethereum network offers practical and clear advantages for its projects and users.

Thirdly, there is a lack of demand from institutional investors. Spot ETF flows have been negative in nine of the last 10 trading days, resulting in significant net withdrawals. The eventual approval of native staking on Ethereum ETFs may not be a game-changer for institutional demand, given the increasing ETH supply and lower demand for blockchain processing.

Lastly, traders are concerned about the potential approval of a spot Solana ETF in 2025, which could create direct competition for investors who currently only have access to Ether and Bitcoin ETF products. For ETH's price to reach $2,500 and beyond, investors need clearer evidence that Ethereum offers sustainable advantages beyond its first-mover advantage.

In summary, Ethereum's future depends on network upgrades, increased network usage, a subsequent decline in supply, and reduced friction