The price outlook for ETH is bearish as the trading volume of Ethereum DEX falls by 34% in a week.

The price of Ethereum (ETH) dropped below $2,200 on March 9 and has struggled to recover since then. This altcoin decreased by 14% in March, and this drop has harmed investor sentiment, especially as the cryptocurrency market as a whole only fell by 4% during the same period.

Adding to the pessimistic sentiment, traders are also concerned that ETH prices will continue to adjust after the activity of decentralized exchange (DEX) on the Ethereum network decreased by 34% in the week.

Ranking blockchains by DEX volume over 7 days, USD | Source: DefiLlamaDEX volume on Ethereum has decreased by 34% over the past week, a trend that has also affected its layer-2 solutions like Base, Arbitrum, and Polygon. The market downturn has also impacted some of Ethereum's competitors, with Solana's DEX activity down 29% and SUI down 17%. On the other hand, BNB Chain saw a weekly trading volume increase of 27%, while Canto surged an impressive 445%.

The negative trend of Ethereum includes a decrease of 85% for Maverick Protocol and 46% for DODO compared to last week. More notably, fees on PancakeSwap, the leading DEX on BNB Chain, have surpassed fees on Uniswap. Although Ethereum still leads in DEX volume, the decreasing fees are diminishing the demand for ETH.

Top protocols – ranked by 7-day fees, USD | Source: DefiLlamaPancakeSwap, exclusively operating on the BNB Chain, generated $22.3 million in fees over seven days, surpassing Uniswap on Ethereum, Base, Arbitrum, Polygon, and Optimism. Other signs indicate a significant drop in Ethereum transaction fees, including Lido lagging behind Solana's Jupiter and AAVE, the leading lending protocol based on Ethereum, generating less fee than Meteora – the automated market maker and liquidity provider on Solana.

Ethereum leads in TVL, but the gap is narrowing

On the positive side, Ethereum still leads in total value locked (TVL) at $47.2 billion, but a 9% decrease over the week has significantly narrowed the gap with competitors. Furthermore, its layer-2 ecosystem has shown signs of weakness in the week leading up to March 18.

The top blockchains ranked by TVL, USD | Source: DefiLlamaTVL of Solana decreased by 3%, while BNB Chain saw a 6% increase in deposits compared to the previous week. Negative signals for Ethereum's TVL include an 11% decrease in StarGate.io Finance over seven days, a 9% drop in deposits on Maker, and a 6% decline on Spark.

The on-chain metrics of Ethereum weakened as the demand for leveraged ETH futures sharply declined. The premium level compared to the spot market has dropped below the neutral threshold of 5%, signaling that traders are gradually losing confidence.

The annual premium fee for Ether futures contracts - 2 months | Source: laevitas.chCurrently, the premium fee for ETH futures contracts is around 3%, the lowest level in over a year, indicating weak demand from traders. Meanwhile, Ethereum spot ETF funds have recorded a net outflow of 293 million USD since March 5, signaling declining interest from institutional investors.

After upgrading Pectra, ETH needs to have a competitive advantage and sustainable application

Ethereum is also facing increasing competition from Solana in the memecoin space, especially after the launch of the Official Trump token (TRUMP).

Tron and Solana have amassed a total of 75 billion USD in stablecoins by leveraging lower transaction fees. Adding to that pressure, the Hyperliquid perpetual futures have introduced their own blockchain, continuing to challenge Ethereum's market position.

All of this is happening against the backdrop of investors and developers fiercely debating whether Ethereum's layer-2 solutions disproportionately benefit from extremely low rollup fees. Essentially, the decline in DEX market share reflects waning institutional interest, especially as Ethereum's staking yield is only at 2.3%.

For Ether to regain its growth momentum, it must demonstrate a clear competitive advantage. The upcoming ‘Pectra’ upgrade needs to provide a feasible roadmap for users to adopt sustainably; otherwise, the chances of ETH outperforming its competitors will remain very low.

You can check the ETH price here.

Disclaimer: This article is for informational purposes only and is not investment advice. Investors should do thorough research before making decisions. We are not responsible for your investment decisions.

• Long-term accumulation of ETH will be interrupted if the price slips below $1,900
• Ethereum delays the Pectra upgrade on the mainnet to launch the third testnet "Hoodi"
• TRX surges strongly after a series of good news - Will the upward trend continue?

Viet Cuong

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