- Ethereum is struggling below $2,000 despite its exchange supply hitting a decade-low, signaling weak market momentum.
- Ethereum faces pressure from declining ETF inflows and rising Layer-2 adoption, impacting its price and network revenue.
Ethereum (ETH) is facing a critical moment as its price struggles to stay above the $2,000 mark, currently hovering around $1,980. Despite historically low exchange supply, ETH remains under selling pressure, raising concerns about its short-term trajectory.
Ethereum’s Supply Shrinks, Yet Price Struggles
On-chain data from Santiment reveals that Ethereum’s exchange supply has dropped to 8.97 million ETH, marking its lowest level since November 2015. Typically, a decline in exchange supply signals accumulation and reduced selling pressure. However, ETH has failed to capitalize on this, dropping over 1.75% in the past 24 hours and remaining one of the worst-performing major cryptocurrencies.
Institutional Investors Retreat from Ethereum ETFs
Ethereum’s bearish sentiment is compounded by continuous outflows from ETH ETFs. Data from Farside Investors shows that ETH ETFs have recorded withdrawals for 11 straight days, with investors pulling out $73.6 million on March 13 alone. This trend signals declining institutional confidence, as investors favor safer alternatives like cash and stablecoins. Total ETH ETF holdings stand at $7 billion, but recent outflows of $358 million reflect uncertainty in the market.
Layer-2 Solutions: A Double-Edged Sword for Ethereum
Ethereum’s diminishing revenue is largely attributed to the rise of Layer-2 solutions like Arbitrum and Base. These networks provide lower fees and faster transactions, diverting a significant portion of activity away from Ethereum’s mainnet. Data from DeFiLlama shows that these platforms handled $5.67 billion out of Ethereum’s total $9.8 billion in decentralized exchange (DEX) volume last week. Consequently, Ethereum’s fee income has plummeted from $218 million in December to just $46 million in February.
Can Staking ETFs Revive Ethereum’s Fortunes?
A potential game-changer for Ethereum could be the approval of staking in ETFs. Both the Chicago Board Options Exchange and the New York Stock Exchange have requested regulatory approval for staking-enabled ETH ETFs. BlackRock’s digital assets head, Robbie Mitchnick, stated that staking yields, which range between 2% and 7% annually, are essential for maximizing returns. If approved, staking ETFs could bolster institutional confidence and provide new bullish momentum.
Ethereum’s Next Move: Reclaim or Collapse?
With ETH struggling below $2,000, analysts warn that a critical move is imminent. Analyst Jelle noted that Ethereum is “about to put in a massive reclaim or jump off a cliff.” If ETH manages to hold above $2,000, it could push toward $2,300 or higher. However, failure to sustain this level could trigger another drop, with $1,750 as the next major support zone.
While Standard Chartered recently revised its year-end ETH price target from $10,000 to $4,000, citing increased competition, Ethereum’s future remains uncertain. The coming weeks will determine whether ETH can reclaim its strength or continue to face downward pressure amid changing market dynamics.
