ETH price trend analysis: the impact of Ethereum Foundation's decision and ecosystem competition

Introduction

The continued sluggish price of Ethereum (ETH) has caused market concerns about its future. As the leader of decentralized smart contract platforms, ETH faces challenges from competitors such as Solana. The Ethereum Foundation’s “hands-off” strategy has been questioned, and can the upcoming Prague upgrade revive the ETH eco? This article will explore the key factors behind ETH’s price trend and provide investors with comprehensive market insights.

ETH price slump: Ethereum Foundation’s hands-off strategy questioned

As the leader of smart contract platforms, Ethereum (ETH) has not performed well in recent years. As of March 12, 2025, the price of ETH is $1,874.58, down 28.77% from 30 days ago, and the 60-day drop is as high as 42.16% . This continued sluggish trend has caused the community to question the management strategy of the Ethereum Foundation (EF).

When taking office, Aya Miyaguchi, chairman of the Ethereum Foundation (EF), emphasized that the role of the foundation is “gardener” rather than “controller”, advocating adaptive growth and decentralized leadership, and opposing corporate expansion. However, this “hands-off” strategy seems to be inadequate in the current competitive market environment. The community criticized EF for failing to actively coordinate ecological resources, which is in sharp contrast to the efficient operation of the Solana Foundation.

It is worth noting that EF’s continued selling of ETH has also caused controversy. Some analysts pointed out that if the foundation stops selling, the price of ETH may rise significantly. However, Vitalik Buterin said that if the foundation pledges ETH, it may be forced to make an “official choice” in a controversial hard fork event, which violates the decentralized principle of Ethereum. This overly idealistic consideration seems to be difficult to respond to the community’s core concerns about ETH’s price performance.

From the perspective of fundamental data, the Ethereum eco is indeed facing challenges. Due to the sluggish Layer1 activity, ETH destruction has been greatly reduced, causing Ethereum to end its nearly two-year deflation cycle and return to inflation, with an annual inflation rate of 0.72%. This not only affects the scarcity of ETH, but may also weaken its attractiveness as a value storage asset.

Faced with these challenges, the Ethereum community called for EF to reform, achieve transparent governance and community supervision, and balance idealism with market demand. At the same time, accelerate the progress of technical development, especially in terms of expansion and cross-Layer2 interoperability, to improve network performance and user experience, and attract more long-term developers.

Intensified ecological competition: Solana’s rise poses a substantial threat to Ethereum

Ethereum faces fierce competition from other smart contract platforms, especially the rise of Solana, which poses a substantial threat to Ethereum’s dominance. Data shows that Solana has shown strong growth in key indicators such as daily transaction volume, average daily active addresses, and number of transactions in the past year, while Ethereum has shown a downward trend.

From the perspective of capital flow, emerging public chains such as Solana are attracting a large amount of capital inflow, while Ethereum is facing the pressure of capital outflow. According to statistics, nearly $8 billion of funds have flowed out of the Ethereum eco in the past year. This shift in capital flow not only reflects the change in investor confidence, but may also further affect the price performance of ETH.

Solana’s rapid development is due to its high performance and low cost, which makes it more attractive than Ethereum in some application scenarios. Especially in the field of meme coins and consumer applications, Solana has become one of the preferred platforms for developers and users. Many founders said that in addition to technical reasons, Solana is able to better capture market attention, which is particularly important in the current market environment where attention is extremely scarce.

Faced with the challenge of Solana, the Ethereum community and developers need to rethink their competitive strategy. Although Ethereum still has advantages in decentralization and security, how to improve performance and user experience while maintaining these core values will be the key to determining its future development.

It is worth noting that this change in the competitive landscape has also brought new vitality and innovation momentum to the entire cryptocurrency eco. For investors and users, this means more choices and opportunities. In this context, trading platforms like Gate.io can provide users with diversified investment options and help them find the best opportunities in different ecos.

Technology Upgrade and Market Expectations: Can the Prague Upgrade Revitalize ETH Prices?

Faced with current challenges, the Ethereum community has set its sights on the upcoming Prague Upgrade (Pectra), hoping to revive ETH prices through technological innovation. The Prague Upgrade is expected to be implemented in the first quarter of 2025. It combines improvements in the ution layer (Prague) and the consensus layer (Electra), and is expected to affect the market from multiple dimensions.

First, the improvement of user experience may become a catalyst for the rebound of ETH prices. The EIP-3074 proposal allows ordinary addresses to implement smart contract functions through caller contracts, supporting functions such as batch transactions, gas fee advances, and asset recovery. This will significantly reduce the user operation threshold, and is expected to promote the adoption rate of DeFi applications such as Uniswap and AAVE, attract more new users to enter the market, and thus stimulate ETH demand.

Second, the staking and re-staking sectors may benefit from the upgrade. EIP-6110 will reduce the staking processing time from 12 hours to 13 minutes, improving security and efficiency. This is good news for staking protocols such as Lido and RocketPool, which may drive up the prices of related tokens and indirectly support the price of ETH. In addition, EIP-7251 will increase the upper limit of a single validator’s staking from 32ETH to 2048ETH, which is expected to attract more institutional funds to enter the market.

However, the Prague upgrade also faces some potential risks. For example, if the caller contract is not strictly audited or is maliciously exploited, it may cause user asset losses. The market needs to pay close attention to the progress of contract upgrades of leading projects (such as Uniswap). In addition, some complex proposals (such as EVM improvements) may affect the upgrade schedule due to development delays, causing market expectations to fluctuate.

In the long run, the Prague upgrade will improve Ethereum’s scalability and developer experience. Verkle trees and statelessness (EIP-2935) are expected to reduce node storage requirements, improve network decentralization, and pave the way for future sharding technology. EOF improvements will improve the efficiency of smart contract ution and may attract more developers to build complex applications.

Although the technological upgrade has brought positive expectations for ETH prices, investors still need to be cautious. Historical data shows that related tokens often start to rise several months in advance before major upgrades. Therefore, in the short term, we can pay attention to the performance of DeFi leaders (such as UNI, AAVE), LSD protocol (LDO) and Layer2 projects (OP, ARB). In the long run, ETH, as a core asset of the eco, coupled with the expected inflow of ETFs, still has allocation value.

Conclusion

Recently, affected by the bearish market, the price of Ethereum once fell below 2,000 US dollars, triggering a new round of FUD sentiment in the market. Faced with the challenges of low prices and intensified ecological competition, EF’s management strategy urgently needs to be adjusted, and the Pectra upgrade expected to arrive in April may become an opportunity to reverse the situation, which is expected to improve user experience and attract institutional funds.

However, technological innovation is only the first step. Rebuilding market confidence and balancing ideals and real needs are the key to long-term development. ETH still has investment value, but investors should pay close attention to the development trend of the eco and carefully assess risks.

Risk warning: Technological upgrades may face delays or security vulnerabilities, and market expectations may fail to meet expectations, which may lead to a further decline in ETH prices.