3 Reasons Why Ethereum Could Outperform Its Rivals After Hitting 17-Month Lows
Despite a sharp decline, ETH shows signs of resilience with growing L2 activity, rising TVL, and a strong DEX presence.
Ethereum (ETH) took a hit recently, dropping 13% between March 8 and March 11 as investors fled to safer assets amid an escalating global tariff war and growing economic uncertainty. The price of ETH plunged to $1,744, marking its lowest point since October 2023. But despite the sell-off, several indicators suggest Ethereum could stage a strong comeback and even outperform its competitors.
1. ETH Needs a 29% Jump to Reclaim $2,500
To recover its footing, ETH must climb 29% from its current $1,940 price level to reach $2,500. This rally will likely depend on renewed demand from leveraged buyers, whose activity is at a five-month low.
Market concerns intensified after the U.S. retaliated against Canada's electricity surcharge, prompting traders to shift to fixed-income investments and cash. However, such reactions often lead to overcorrections, increasing the chances of a swift ETH rebound once market sentiment improves.
Another key factor is the premium traders expect to compensate for longer settlement periods. In a neutral market, this premium (basis rate) typically falls between 5% and 10% annually. Right now, it's sitting at just 4.5%, signaling weak bullish conviction. The recent market drop was also fueled by excessive optimism, as $235 million in leveraged long positions were liquidated between March 10 and March 11.
2. Ethereum’s Layer-2 Ecosystem Is Booming
Ethereum has faced stiff competition in the smart contract space, with rivals capitalizing on its past inefficiencies and high fees. However, the network has made major strides, especially in its Layer-2 (L2) scaling solutions.
For context, Ethereum’s average transaction fee exceeded $50 in late 2021, while today, a token swap on its base layer costs just $1.70. Meanwhile, L2 activity has surged by 97% since then, proving that scaling solutions like Base, Arbitrum, Optimism, ZKsync, and Blast are gaining traction.
Even if bots are responsible for 80% of L2 transactions, the remaining 20% is still roughly three times the activity seen on Ethereum’s main network. However, one concern remains: validator earnings are significantly lower compared to late 2021, despite the increased network usage.
3. Ethereum Regains DEX Leadership and TVL Grows
Ethereum continues to cement its position as a key player in institutional finance, with spot exchange-traded funds (ETFs) holding $8.9 billion in assets. In contrast, competitors like Solana are still awaiting regulatory approval for their own ETFs, giving Ethereum a clear first-mover advantage.
Another bullish sign is Ethereum’s total value locked (TVL), which hit its highest level since July 2022 in ETH terms on March 11. Over the past two weeks, TVL has grown 10%, reaching 24 million ETH. This growth is largely fueled by the rise of liquid staking, lending, yield farming, and real-world asset tokenization.
Moreover, Ethereum has reclaimed the top spot in decentralized exchange (DEX) volume, with a seven-day trading volume of $20.5 billion, surpassing Solana’s $13.9 billion, according to DefiLlama data.
The Road to $2,500
While Ethereum’s price recovery is still closely tied to macroeconomic conditions, the network’s expanding L2 ecosystem, strong DEX presence, and increasing TVL signal that it could be primed for a comeback. Once the market stabilizes, ETH appears well-positioned to reclaim $2,500 as a key support level in the near future.
