Investors along with developers face growing concerns about the series of obstacles currently affecting Ethereum which maintains its position as the world’s second-largest cryptocurrency based on market capitalization. Ether (ETH) suffered a major drop of 16% and reached a trading value of $1,907 on March 13. The token market value decline matches the delayed development of the Pectra upgrade as well as growing doubts about the internal organization of the Ethereum Foundation.

Pectra Upgrade Faces Testing Hurdles

Ethereum launched Pectra as its largest network advancement since 2024 to improve both efficiency and user experience. The Ethereum Improvement Proposal (EIP) 7702 serves as the core element of this update because it enables smart contract capabilities within crypto wallets that advance account abstraction methods. EIP-7251 seeks to enhance ETH staking by increasing the maximum validator ETH stake from 32 to 2,048 and simultaneously making node setup easier for validators. 

The project has faced major technical difficulties during its recent examination. The Holesky testnet activation on February 24, 2025, resulted in an unsuccessful system operation that required developers to examine the underlying causes. Additional empty blocks appeared on the Sepolia testnet after developers made wrong configuration choices. Developer teams decided to delay Pectra’s mainnet deployment because of multiple recent failures thus starting network stability testing procedures. 

In a recent interview with Blockchain News, Dom Harz, co-founder of BOB (“Build on Bitcoin”) said: 

“While the recent Sepolia testnet issues are disrupting the mainnet launch, they are far from Ethereum’s biggest problems. After all, this is exactly why testnets exist.”

He added about the Pectra upgrade and said:

“Once Pectra goes live, it will double available data space for Layer-2s, reducing costs and increasing execution capacity. While that’s a step in the right direction, the reality is that Ethereum is quickly losing its position as the go-to chain for builders, and Pectra isn’t the fix-all solution to its deeper issues. Ethereum has underperformed. Monday’s price drop erased all DeFi TVL gains since Trump’s election. Between Solana’s memecoin frenzy and Ethereum’s fractured few months, it’s clear the industry is searching for a new, more sustainable and secure frontier for DeFi.”

He sheds light on security by adding,

“Efficiency matters, but security is essential. At the core of BitVM — and the original crypto ethos — is the push to build a trustless financial system. TradFi relies on banks, regulators, and institutions acting in good faith, but history, both in TradFi and crypto, has shown that’s a dangerous assumption. The recent Bybit hack is just the latest reminder. If crypto is just ‘TradFi but faster,’ we’ve failed. The goal must be a truly trustless DeFi ecosystem — one that removes centralized points of failure.”

Market Dynamics and External Factors

The cryptocurrency sector as a whole experiences market impacts because of recent government policies. The market reacted positively after President Donald Trump implemented an order directing the federal government to develop a strategic reserve containing Bitcoin and Ethereum among digital assets. A market reaction arose because the plan restricted itself to seized assets but did not include government acquisitions. Cryptocurrency prices saw a collective drop of 2.7% after Bitcoin decreased to trade at $88,000. Ethereum and others in the market followed the same downward trend. 

Hearing about ongoing internal conflicts within the Ethereum Foundation has spread despite technical challenges as well as market fluctuations. Ethereum faces criticism for its lack of strategic direction that would enable it to challenge the emerging cryptocurrency networks including Solana. ETH faced intensified negative sentiment due to its declining price behavior which analysts view as an indicator of weakening market support. 

Ethereum Faces Bearish Pressure Amid ETF Outflows and Historical Market Patterns

Throughout the previous 24 hours, Ethereum (ETH) declined by 0.74% to reach a trading price of $1,907. The cryptocurrency achieved its peak at $1,960 during that time but later fell to $1,750. The price movement shows negative momentum since Ethereum rejected higher price levels and then retreated from previous gains.

The trading market value of Ethereum reaches approximately $228.15 billion and the 24-hour trading volume exceeds $22.98 billion. Ethereum has faced a 15.32% price decline during the last week based on market fluctuations. 

Ethereum exchange funds have seen major cash withdrawals as financial managers withdraw assets. ETH ETFs reported a total of 14,836 ETH departures which translated into $29.98 million on March 12, 2025. The 6,056 Ethereum tokens worth $11.35 million were part of iShares (BlackRock) during this movement. 

This negative market trend among crypto investors indicates that they are moving their funds into alternative assets or extracting profits from the market.

The chart presented by Merlijn The Trader demonstrates how Ethereum’s price patterns matched between 2016-2017 and 2024-2025 which indicates that historical trends might lead to a major price surge.

Ethereum maintains “strong sell” or “neutral” market indicators across different periods which based on historical data indicates such conditions often lead to significant price appreciations that attract cryptocurrency market traders.