Bitcoin posted one of its worst yields in the first quarter in 2025, Ethereum has even worse, with more than 45% print in its price. The price of Ethereum has been down since Dencun upgrade in March 2024. The fall of Ethereum seems to be driven by layers of layer 2 amassing a large volume of transactions and transmitting the fraction of revenues to the ETH chain.
Ethereum (ETH) has looked into its role of security infrastructure and the underlying blockchain for layer 2 protocols, scaling cryptographic ecosystem and loss of value throughout 2025. Traders and investors holding the greatest Altcoin arise if Ethereum will never lose the value or lose the relevance in H1 2025.
Ethereum POWERS The ladder of layer 2, the Mainnet loses ground
Ethereum started in order to become the decentralized computer of the world, and the chain has accumulated a value from ICO, gathering at its peak of $ 4,878 in November 2021. Since then, 71% of its value over four years.
The most notable change which is considered to be the catalyst for the drop in the price of the ether is its model of scaling centered on layer 2. Ethereum has gone from its main role as Mainnet to the chain which aggregates the value and feeds the scaling of layer 2.. The movement fueled by the Dencun upgrade which has reduced the transaction costs for the 2 -layer chains. Ethereum’s ecosystem.
The use of Ethereum as a base chain has become much cheaper for layer 2 and layer 3 projects, supplying a large DEFI ecosystem. Base by Coinbase has raised $ 94 million in profits and paid a cost fraction, $ 4.9 million in Ethereum.
The profitability of layers in layer 2 sparked the debate on the question of whether layers 2 remove the value of Ethereum or feed the company of people where they draw security and transmit revenues to the ETH blockchain.
Dencin upgrade has reduced ETH value, transaction income has decreased
The Dencun upgrade made the colony of layer 2 cheap enough to lower the entrance barrier for the DEFI protocols. Ethereum has crossed $ 44 billion in total value of locked assets and a drop in the costs collected by the network has disrupted the objective of transforming the “deflationist” Altcoin.
With a lower volume of costs collected by the chain, while Ethereum is not a deflationist, the offer should increase less than one percent per year, according to ultrasound. Crypto experts on X and traders through the scholarships have questioned Ethereum’s value proposal in light of its modified business model.
Pectra Metgrade, the next key update of the Ethereum ecosystem could reconstruct the value of the chain if it stimulates the request.
Ethereum yields and the price of ETH are increasingly linked to costs and burning
Ethereum holders and merchants have examined measures such as the total value of the assets locked on the chain and volume, the relevance and demand for transactions, before, to determine the price of the ETH. Ethereum is now increasingly valued at the expense generates the costs, the chip burn and the net revenues generated.
With the drop in costs and migration of value and transactions to layer 2, a key metric, the number of Ethereum transactions shows a sharp decline.
To worsen things, institutions have lost their interest in ether, probably attributed to the pivot in the chain’s business model and the Ethereum Foundation has sold consistent in recent months, which raises concerns among traders.
The FNB ETFs of American points based in the United States did not arouse the interests of institutional investors and the entries were stifled throughout 2025.
What to expect from the upgrade of Pectra?
Pectra upgrade will have an impact on validators and stakers in the Ethereum ecosystem. Pectra will introduce the protocols to improve ethereum which will rationalize the management of validators, reduce congestion on the chain, improve the effectiveness of the validator’s deposits and give higher control to stakers on the output of the validators.
Although the upgrade is filled with relevant technical updates of the blockchain developer, the modifications should generate a higher value towards Ethereum.
Pectra upgrade will have a significant impact on Ethereum validators and stakers, introducing DPIs which rationalize the management of validators, reduce the congestion of the network, improve the efficiency of validator’s deposits and empower stakers with more control over validators’ outings.
Marko Ratkovic, CTO of Graphite Network, a business surveillance tool and a layer 1 blockchain, told Crypto.News,
“Pecctra should have a positive impact on the growth of users of the L2 network, because two of the new EIPs are directly intended for this: EIP-7691 increases the number of Blobs per block, and EIP-7623 increases the cost of call data-which encourages Blobs, which means that L2 are even more effective.
Overall, says Ratkovic, Pectra is a big step forward.
The executive explains with the example of EIP-7702:
“Take EIP -7702, for example – it allows you to send transactions without the need for the native token. This solves a long-standing problem that required bypassing solutions such as the service station network, but now it is natively resolved in terms of the protocol.
At the same time, levels of Ethereum remain of a technical nature and do not attack directly away between Tradfi and Defi. While Ethereum focuses on the rationalization of integration, the reduction of general costs and the improvement of the flow, institutional actors are more concerned with legal clarity, verification of users and the prevention of illicit flows. »»
Chains and graphite could resolve the challenges that institutional investors face, supporting the ecosystem as a whole.
Dr. Sean Dawson, research manager at Derive.xyz, a platform of decentralized options on the channel, told Crypto.News:
“While volatility continues to rise, we note that the implicit volatility (IV) for ETH increases from 71.5% to 122%, reflecting uncertainty and fears of the chaos market.
For the future, the probability of ETH falls below $ 1,400 by May 30 has almost doubled from 18% to 33% on April 8, reporting an increase in the lowering feeling on the market.
In short, we are in a bumpy conduct, and volatility will probably remain high because traditional and digital markets continue to react to these macroeconomic shocks. Traders and investors should prepare for more uncertainty in the coming weeks while the market sails in these turbulent waters. »»
Disclosure: This article does not represent investment advice. The content and equipment presented on this page are only for educational purposes.
