Ether (ETH) Price Needs 29% Gains to Reclaim $2.5K

Ether ETHUSD fell 13% between March 8 and March 11 as investors moved to short-term fixed-income and cash positions, seeking safety amid a global tariff war and rising fears of an economic downturn.

Ether (ETH) price fell 13% between March 8 and March 11 as investors booked more short-term fixed-income and cash positions amid a global tariff war and increased fears of an economic downturn.

ETH price needs 29% gains to hit $2.5K

The market concerns heightened after the U.S. responded to Canada’s electricity surcharge with retaliatory measures, which traders typically overreact to, making it more likely that Ether will recover faster than other assets.

While some suggest that risk assets are driven by inflation and economic growth data, others say gains depend on stimulus measures and monetary expansion.

Regardless of the catalyst for the next bull run, Ether price needs to climb 29% from its current $1,940 level to reach $2,500. This move will require increased demand from leveraged buyers, whose activity is now at its lowest point in five months.

Traders want higher prices to compensate for longer settlement periods, making a 5% to 10% annualized premium (basis rate) expected in neutral markets. When rates fall below this range—such as the current 4.5%—it signals weak bullish conviction.

Excessive optimism played a role in Ether’s recent correction, as $235 million in leveraged long positions were liquidated between March 10 and March 11.

The panic selling drove ETH to a low of $1,744, its lowest level since October 2023. However, several indicators suggest a potential recovery, as ETH derivatives and onchain metrics show resilience.

Ethereum L2 network grows

Ether is currently trading 60% below its all-time high of $4,868 from November 2021. This decline is largely attributed to increased competition in the smart contract sector and waning demand for applications such as non-fungible tokens (NFTs), gaming, collectibles, metaverse projects, social networks, and Web3 infrastructure.

However, this perspective neglects a crucial factor. In late 2021, the average transaction fee on Ethereum was over $50, and the activity on the layer-2 ecosystem was 97% lower than it is today.

For instance, a token swap on Ethereum’s base layer cost $1.70 on March 11 despite the fact that the number of daily average operations per second is increasing, highlighting the progress in network efficiency.

Even if bots generate 80% of layer-2 transactions, the remaining 20% of activity on Base, Arbitrum, Optimism, ZKsync, and Blast is still roughly three times higher than Ethereum’s base layer. But critics have a valid point: despite the surge in network activity, validators are earning significantly less compared to late 2021.

Ethereum regains DEX top-spot, TVL grows

Ethereum has also strengthened its position as the second-most preferred option for institutional investors in traditional finance, supported by $8.9 billion in spot exchange-traded funds (ETFs).

Meanwhile, competitors like Solana are still awaiting regulatory approval for similar ETF products. Even if they do get approved, they cannot compete with the first-mover advantage of the Grayscale Ethereum Trust, which commenced public trading on over-the-counter markets in June 2019.

Furthermore, Ethereum smart contract deposits, measured by total value locked (TVL), reached their highest level since July 2022 in ETH terms on March 11, marking a 10% increase over the past two weeks.

At 24 million ETH, Ethereum’s TVL has been driven by the growth of liquid staking, lending, yield farming, and real-world asset tokenization. The network recently reclaimed its leading position in decentralized exchange volumes, reaching $20.5 billion over seven days and surpassing Solana’s $13.9 billion, according to DefiLlama data.

This presents a bullish outlook for ETH’s price, fueled by layer-2 transactions nearing all-time highs, the network's return to the top spot in DEX volume, and the observed increase in TVL deposits.

Ultimately, the trend reversal of Ether remains heavily dependent on macroeconomic improvements, but once stabilized, ETH is poised to regain $2,500 as a key support level in the coming weeks.