Unless you’ve been completely disconnected, you've likely noticed Ethereum's challenging performance over the past several months. Price action, market dominance, and community sentiment have all been undeniably weak. The leading altcoin appeared to be in a persistent downtrend—it didn’t even set a new all-time high during this market cycle. However, in the last few days, Ethereum has shown signs of a rebound. What caused its prolonged stagnation, and can the current momentum lead to a sustained recovery?
Understanding Ethereum’s Recent Struggles
There is little doubt that Ethereum has been under significant pressure. Since December 2024, during periods of market-wide cryptocurrency downturns, Bitcoin repeatedly bounced back to previous levels and beyond, while Ethereum struggled to regain its footing.
Here’s a snapshot of Ethereum’s market performance in recent months. In November 2024, during an upward market phase, Bitcoin was trading around $96,405 and Ethereum near $3,703. By December 1, the market saw a slight correction: Bitcoin dropped to $93,557, and Ethereum fell to $3,337. Although both assets later touched higher levels that month, they failed to sustain the momentum and declined again.
By January 1, 2025, Bitcoin had climbed slightly to $94,500, while Ethereum continued its slide to $3,298. On February 1, Bitcoin’s price fell noticeably to $84,381, and Ethereum dropped further to $2,236. Later in February, Bitcoin surged to $102,000, but Ethereum couldn't reclaim its earlier highs. In fact, while Bitcoin recovered from $84,381 in February to $94,304 by April, Ethereum kept declining, unable to retest previous resistance levels. The expanding BTC/ETH ratio, as seen in market data, clearly illustrates this trend.
As of this writing, Ethereum trades around $2,400—a notable uptick considering its recent performance, though it has yet to challenge higher price ranges. So what exactly is holding Ethereum back? Let’s examine a few key factors.
Bitcoin and Meme Coins Dominated the Narrative
In recent months, Bitcoin and meme coins captured most of the market’s attention. You may have heard about the U.S. government’s proposed strategic Bitcoin reserve. This initiative sparked discussions among retail and institutional investors alike, with several U.S. states moving to establish their own Bitcoin reserves. Texas and New Hampshire led the way, with other states and even some national governments following suit.
Sovereign interest further attracted whales and institutional players. Michael Saylor’s Strategy (formerly MicroStrategy), for instance, continued accumulating Bitcoin, reinforcing its position as the largest corporate holder. The company now holds over 555,000 BTC—a significant portion of the 21 million Bitcoin supply.
While Bitcoin took center stage, meme coins also overshadowed Ethereum. Unfortunately for Ethereum, most of these meme tokens weren’t launched on its blockchain. Fartcoin, one of 2025’s most successful meme coins with a market cap exceeding $1 billion, debuted on Solana. The popular meme token launch platform Pump.fun also operates on Solana. Most of the hottest meme tokens created in late 2024 and early 2025 originated from Pump.fun.
As a result, Ethereum largely missed out on this trend. Moreover, discussions around decentralized finance (DeFi) have subdued due to a lack of major recent innovations. Simply put, Ethereum hasn’t been at the center of any major bullish narrative—nothing significant enough to drive substantial price appreciation.
Liquidity Migration to Layer-2 and Subnetworks
Ethereum’s historically high gas fees have been a major barrier to growth. To make matters more complex, the network now competes with numerous Layer-2 solutions like Polygon, Optimism, Base, Linea, and Arbitrum. These networks siphon liquidity away from the Ethereum mainnet.
With stablecoins like USDC widely available on these chains, users don’t need to hold much ETH to perform operations. These Layer-2 platforms support a variety of activities, reducing the number of transactions settled directly on Ethereum. Although high network usage should ideally drive ETH demand, that hasn’t been the case recently.
Rising Competition from Alternative Layer-1s
We’ve already touched on how competitors like Solana have eroded Ethereum’s market dominance. The reality is, Solana offers a superior experience for many developers and users. Who wouldn’t prefer a faster, cheaper, and highly functional blockchain? According to a recent CoinGecko report, Solana’s ongoing on-chain activity explains why it continues to attract more developers and retail investors. Here are a few standout reasons:
- Higher Performance and Scalability: Solana can process up to 3,000 transactions per second, with a theoretical limit of 65,000 TPS. This dwarfs Ethereum’s roughly 15 TPS. Given Solana’s extremely low costs for large transactions, its appeal to developers is clear.
- Active and Supportive Ecosystem: Solana offers a rich array of developer resources, tools, and grant opportunities, enabling new projects to emerge seamlessly.
Similarly, Avalanche has been growing in popularity and capability. Increased institutional adoption of these Layer-1 platforms could further challenge Ethereum’s dominance. Other networks like Hyperliquid and Tron are also gaining traction in perps trading and stablecoin markets, respectively.
Limited Institutional Interest
While global corporations, market whales, and nations continued accumulating Bitcoin, Ethereum told a different story. According to CoinGecko, few public companies hold Ethereum, with the total value held under $500 million—compared to over $50 billion in Bitcoin holdings.
The crypto ETF market also highlights the vast demand gap between Bitcoin and Ethereum. Ethereum-focused ETFs failed to record inflows comparable to Bitcoin products. Bitcoin’s first-mover advantage and widely accepted value storage narrative attracted large institutional allocations. Although Ethereum spot ETFs gathered billions, their numbers still pale in comparison to Bitcoin’s.
Reasons for Hope: Can Ethereum Make a Comeback?
Ethereum needs a major catalyst to regain market dominance, attract broad investment, and stage a significant price rally. At the time of writing, Ethereum had just activated a network upgrade. This is a positive development, though it doesn’t fully address challenges like asset bridging across its Layer-2 ecosystem.
Competitors like Solana still hold an advantage in user experience, enabling seamless interaction between multiple decentralized applications (dApps). That said, the recent upgrade appears to have positively impacted Ethereum’s price, contributing to a 20% surge over 24 hours to reach $2,400. Whether this top altcoin can stage a full comeback remains to be seen. Market participants will be watching closely to gauge how much the upgrade improves the Ethereum network and whether it’s enough to put ETH back on track 👉 Explore more blockchain insights.
Frequently Asked Questions
What caused Ethereum’s price to drop recently?
Ethereum faced multiple headwinds, including intense competition from other blockchains, a shift in investor interest toward Bitcoin and meme coins, and liquidity fragmentation across its own Layer-2 networks. These factors reduced demand for ETH and limited its price momentum.
How do Layer-2 networks affect Ethereum’s value?
Layer-2 networks reduce the need for users to transact directly on the Ethereum mainnet. Since many operations and tokens exist on these secondary layers, less ETH is required for gas fees and transactions, potentially lowering overall demand for the native token.
Can Ethereum recover its market position?
Yes, it’s possible. Ethereum remains the largest platform for smart contracts and dApps. Technological upgrades, growing adoption in decentralized finance, and renewed institutional interest could help Ethereum regain momentum and market share.
Why are competitors like Solana gaining traction?
Solana offers higher transaction speeds and lower fees compared to Ethereum. This performance advantage, combined with a vibrant ecosystem and strong developer support, has attracted users and projects seeking scalability and cost-efficiency.
What role do ETFs play in Ethereum’s performance?
ETFs make it easier for traditional investors to gain exposure to Ethereum. While Ethereum ETFs have seen inflows, they still trail far behind Bitcoin ETFs, reflecting comparatively lower institutional demand at this stage.
Is now a good time to invest in Ethereum?
Market timing is always uncertain. While recent upgrades and price movements are positive signs, investors should carefully evaluate their risk tolerance, conduct thorough research, and consider long-term trends rather than short-term fluctuations.