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"Ethereum Plunges, Recovers Amidst Tariff Turmoil; Institutions Buy $300M ETH"

Coin WorldTuesday, Feb 4, 2025 8:02 pm ET

1min read

Ethereum's price has been volatile in recent days, with a sharp decline to $2,150 on Feb. 3, its lowest level since September 2021. This drop came amidst global market uncertainty, as the U.S. imposed tariffs on imports from Canada, Mexico, and China. However, diplomatic efforts led to a temporary pause on these tariffs, which improved market sentiment and sparked a recovery in Ethereum's price to $2,700 as of Feb. 4.

During this period, World Liberty Financial, a DeFi project associated with the Trump family, moved $307.41 million in assets to Coinbase Prime and purchased 1,826 ETH at $2,738. Additionally, Fidelity bought $49.75 million worth of Ethereum on Feb. 4. Despite these institutional purchases and the price recovery, ETH remains down 15% over the past week and is still nearly 45% below its all-time high.

Ethereum's ecosystem has been making critical changes to improve scalability and transaction efficiency. On Feb. 3, validators approved an increase in Ethereum's gas limit, allowing more transactions and operations to fit within a block and improving overall throughput. This change also benefits the growing ecosystem of financial applications, NFT platforms, and on-chain services. However, Ethereum still faces challenges in cost and speed compared to other networks like Solana.

To address these concerns, Ethereum's upcoming Pectra upgrade, set to go live in early 2025, is expected to enhance network scalability further, particularly for layer-2 solutions. This upgrade involves increasing the blob target from three to six, which effectively increases the throughput of layer-2 networks. Layer-2 solutions like Arbitrum, Optimism, and zkSync already play a crucial role in reducing congestion and gas fees for Ethereum users.

Ethereum's market position has also been facing pressure, as the ETH/BTC ratio has dropped to 0.027 as of Feb. 4, its lowest level since March 2021 and nearly 50% lower than a year ago. As Bitcoin continues to gain dominance in liquidity and investor interest, Ethereum's relative valuation remains under scrutiny.

Ethereum's recent price drop to $2,

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