3 reasons why Ethereum can outperform its rivals after crashing to 17-month lows

Ether’s recent market performance has stirred considerable interest among investors and analysts alike, as the cryptocurrency navigates a turbulent landscape marked by global economic uncertainties. Between March 8 and March 11, Ether’s price plummeted by 13%, driven by a strategic shift among investors toward short-term fixed-income and cash positions amid rising fears of an impending economic downturn and escalating tariff conflicts.

### ETH Price Needs 29% Gains to Reclaim $2.5K

Concerns intensified following retaliatory measures from the United States in response to Canada’s electricity surcharge, prompting analysts to closely monitor market reactions. Traders often display a tendency to overreact during turbulent times, suggesting that Ether could potentially rebound more swiftly than other assets once market sentiment begins to shift in a positive direction.

To regain the $2,500 threshold, Ether will need to mount a significant recovery, requiring a 29% increase from its current valuation of approximately $1,940. Such a rally is likely contingent upon a resurgence in demand from leveraged buyers, whose activity has recently dipped to its lowest levels in five months. The futures market indicates that traders typically seek a premium of 5% to 10% to offset longer settlement periods; however, the current annualized premium stands at a mere 4.5%, signaling weak bullish conviction within the market.

Excessive optimism led to a substantial realization of losses, with about $235 million in leveraged long positions liquidated during the recent downturn. This liquidation spree drew Ether down to a troubling low of $1,744, the lowest point recorded since October 2023. Nevertheless, emerging indicators hint at potential recovery, supported by resilience evident in Ether derivatives and on-chain metrics.

### Ethereum L2 Network Growth

Currently, Ether trades at about 60% below its all-time high of $4,868 reached in November 2021. This decline is attributed to heightened competition within the smart contract domain and a diminishing demand for various sectors, including non-fungible tokens (NFTs), gaming, and Web3 applications.

Contrastingly, Ethereum’s Layer-2 ecosystem has experienced notable progress, with transaction fees plummeting from an average of $50 in late 2021 to a much more palatable $1.70 for a token swap as of March 11. The daily average operations rate of Layer-2 solutions has increasing momentum, even when accounting for the influence of bots that may account for a significant portion of transactions.

Even so, some critics voice concerns regarding validator earnings, which have taken a hit compared to those witnessed in late 2021, despite the uptick in overall network activity.

### Ethereum Regains DEX Top-Spot as TVL Grows

Despite its challenges, Ethereum has solidified its standing as a contender within traditional finance, boasting approximately $8.9 billion in spot exchange-traded funds (ETFs). In comparison, competitors like Solana continue to seek regulatory approval for similar products, yet they cannot replicate the first-mover advantage enjoyed by the Grayscale Ethereum Trust, which began trading in June 2019.

Moreover, Ethereum’s total value locked (TVL) has surged to its highest level since July 2022, reflecting a 10% increase over the last fortnight. This growth is propelled by developments in liquid staking, yield farming, and real-world asset tokenization. Recent reports indicate that Ethereum has reclaimed its position at the forefront of decentralized exchange (DEX) volumes, with a notable $20.5 billion transacted over the past week, surpassing Solana’s $13.9 billion.

The bullish outlook for Ether is underscored by the surge in Layer-2 transaction volumes and its reaffirmed lead in DEX activity, ultimately laying a foundation for potential price recovery. As the market adjusts to the current economic environment, Ether appears well-positioned to strive toward the $2,500 mark, should macroeconomic conditions stabilize favorably in the weeks to come.