Ether ( ETH ) price fell below $2,200 on March 9 and has struggled to recover since. The altcoin is down 14% in March and the decline has hurt investor sentiment, especially as the broader crypto market only dropped 4% in the same period. 

Adding to the bearish sentiment, traders are also worried about further ETH price corrections after a 34% weekly drop in decentralized exchange (DEX) activity on the Ethereum network.

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Blockchains ranked by 7-day DEX volumes, USD. Source: DefiLlama

DEX volumes on Ethereum dropped 34% in the last seven days, a trend that also affected its layer-2 solutions like Base, Arbitrum, and Polygon. The market slump hit some Ethereum competitors, too, with Solana’s DEX activity down 29% and SUI’s down 17%. On the other hand, BNB Chain saw a 27% weekly volume increase, while Canto surged an impressive 445%.

Ethereum's negative volume trends include an 85% drop for Maverick Protocol and a 46% decline for DODO compared to the previous week. More notably, fees on PancakeSwap — the top DEX on BNB Chain — surpassed those on Uniswap. While Ethereum remains the leader in DEX volumes, falling fees are reducing demand for ETH.

ETH price prospects dim as Ethereum DEX volumes drop 34% in a week image 1

Top protocols ranked by 7-day fees, USD. Source: DefiLlama

PancakeSwap, which operates exclusively on BNB Chain, generated $22.3 million in fees over seven days, surpassing Uniswap, which runs on Ethereum, Base, Arbitrum, Polygon, and Optimism. Other signs of Ethereum’s fee weakness include Lido trailing Solana’s Jupiter and AAVE, the leading Ethereum-based lending protocol , generating less in fees than Meteora, a Solana-based automated market maker and liquidity provider. 

Ethereum leads in total value locked, but the gap is narrowing

On the positive side, Ethereum remains the dominant leader in total value locked (TVL) at $47.2 billion, but a 9% weekly decline has significantly narrowed the gap with competitors. Furthermore, its layer-2 ecosystem showed increasing signs of weakness over the seven days leading up to March 18.

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Top blockchains ranked by total value locked, USD. Source: DefiLlama

Solana’s TVL dropped 3%, while BNB Chain saw a 6% increase in deposits compared to the prior week. Negative highlights for Ethereum’s TVL include an 11% decline in Stargate Finance over seven days, a 9% drop in deposits on Maker, and a 6% decline on Spark.

Ethereum’s weakening onchain metrics aligned with reduced demand for leveraged longs in ETH futures, as their premium over spot markets fell below the 5% neutral threshold, signaling weaker confidence from traders.

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Ether 2-month futures annualized premium. Source: laevitas.ch

The current 3% annualized ETH futures premium is the lowest in over a year, highlighting weak demand from bullish traders. Meanwhile, spot Ethereum exchange-traded funds (ETFs) have recorded $293 million in net outflows since March 5, signaling waning institutional interest.

After Pectra upgrade, ETH needs a competitive edge and sustainable adoption

Ethereum is also facing growing competition from Solana in the memecoin sector, particularly after the launch of the Official Trump (TRUMP) token. Simultaneously, Tron and Solana have captured a combined $75 billion in stablecoins by leveraging lower transaction fees. Adding to the pressure, Hyperliquid perpetual futures introduced its own blockchain, further challenging Ethereum’s market position.

Related: Hyperliquid opened doors to ‘democratized’ crypto whale hunting: Analyst

All of this unfolded amid heated debates among investors and developers over whether Ethereum layer-2 solutions are disproportionately benefiting from extremely low rollup fees. Essentially, the decline in the DEX market share reflects waning institutional interest, particularly as Ethereum’s native staking yield sits at just 2.3% when adjusted for inflation-driven supply growth.

For Ether to regain momentum, it must demonstrate a clear competitive edge. The upcoming “Pectra” upgrade needs to provide a viable path for sustainable user adoption; otherwise, the odds remain stacked against ETH outperforming its rivals.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.