Ethereum price outlook: As demand from developers and investors decreases, Ethereum (ETH) keeps increasing under pressure. ETH was trading at $1,800 on Tuesday morning; traders were waiting for the much-needed Pectra update. This post will investigate whether Ethereum is headed for a price surge or if it will keep on its declining trend this year.
The Pectra Upgrade: A Game-Changer for Ethereum
Ethereum will take center stage as it releases the much-awaited Pectra upgrade, including a hard fork meant to change the network’s capability completely. Combining the Prague and Electra systems to improve scalability and efficiency, the Pectra upgrade is the most important one since the Dencun one.
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Prague serves as the execution layer, while Electra functions as the consensus layer. Both will work together to improve Ethereum’s overall performance.
The Pectra update seeks to strengthen Ethereum’s scalability by raising throughput and reducing layer-2 roll-up costs. It will simplify validator processes, enhance security and user experience, and promote staking. The upgrade’s main suggestion is raising the maximum effective balance for validators from 32 ETH to 2,048 ETH. Under a single validator account, this update will let validators stake different ETH amounts, between 32 and 2,648.
The account abstraction upgrade, which lets outside-owned accounts momentarily function as smart contracts during transactions, also marks another significant development. Furthermore, the goal blob from 3 to 6 and the maximum blob size from 6 to 9 will rise with the growth in blob throughput. Other improvements will include enhanced execution layer-triggered exits, validator deposit on-chain, higher call data fees, and better curve operations.
Ethereum Struggles Amid Growing Competition
For Ethereum, the Pectra update comes at a difficult period when layer-2 and layer-1 networks compete fiercely. Layer-2 protocols progressively take market share from Ethereum’s distributed exchange (DEX) sector supremacy. Ethereum protocols have handled $54 billion in volume throughout the past thirty days. While Base (owned by Coinbase) managed $20 billion, Unichain, a new network out of Uniswap, handled over $4.2 billion. Arbitrum also handled $13 billion over this time, suggesting a definite change in transaction volume away from Ethereum.
Popular layer-1 networks such Tron, Solana, BNB Smart Chain, and Sui are also under pressure Ethereum is from. For developers and consumers, these networks provide lower costs and better transaction speeds, which appeals. Ethereum thus finds it difficult to produce the same income as in past years. TokenTerminal claims that Ethereum’s fees this year amount to about $250 million, which is low compared to other chains like Solana and Tron.
Additionally, Ethereum is experiencing declining demand for its ETFs. Whereas Bitcoin ETFs experienced around $5 billion in inflows in the past three weeks, the weekly inflows into Ethereum ETFs plummeted from $157 million to $106 million last week.
Ethereum Price Outlook: Will It Recover or Drop Further?
Based on the daily chart, Ethereum’s price dropped to $1,424 in April and then rose to $1,800. Commonly known as a positive reversal sign, this rally followed a declining wedge formation. Still, even with the comeback, Ethereum has found it difficult to gather momentum above the $1,800 barrier.
Ethereum has failed to breach critical resistance levels like $2,000 and $2,125—the neckline of a bigger double-top pattern with a price goal of $4,078—while the volume and financing rates have dropped. Given this technical configuration, Ethereum risks starting its declining trend if it stays below $2,125. If that occurs, it might drop to as low as $1,000 in the following weeks.
