Ethereum’s price continues its downward trajectory, losing 16% in the past week, according to the latest CoinMarketCap data. With key support levels weakening, analysts are increasingly concerned about a potential drop to $1,200. The network's dominance in the blockchain ecosystem also faces growing threats from competitors like Solana and the ongoing migration to layer-2 solutions.

Key Price Support Levels

Ethereum’s price has been trapped in a bearish cycle since failing to break the $4,000 resistance. It has steadily declined, breaching several support levels, including the critical 200-day moving average at $3,000. While ETH recently found support at $2,200 and attempted a rebound, it remains vulnerable as long as it trades below the 200-day moving average.

On the 4-hour chart, Ethereum is in a consolidation pattern, trading at $2,764 at the time of publication. The price is attempting a price recovery after testing $2,229 on February 3. In the same chart, the Relative Strength Index (RSI) remains below 50%, highlighting a persistent bearish momentum. If ETH fails to reclaim the $3,000 mark, deeper corrections could be expected.

Ethereum’s futures market provides additional insights into the ongoing price struggles. Funding rates, a measure of sentiment among traders, have dropped significantly since the latest downturn.

While this suggests that the futures market is no longer overheated, it also reflects the lack of strong buying interest needed for a recovery. Without fresh demand in the spot market, ETH’s chances of rebounding remain slim. The crypto community remains split on ETH’s future trajectory, with some expressing concerns that a key support breakdown at $2,400 could lead to a steep drop toward $1,200.

Ethereum’s Competitive Challenges

Ethereum’s struggles are not just price-related. JPMorgan’s latest report pointed out that Ethereum is facing increasing competition from alternative blockchains, particularly Solana, according to Coindesk's report.

Another issue highlighted by the bank is Ethereum’s growing reliance on layer-2 networks. While these scaling solutions help reduce congestion, they also divert activity away from the Ethereum mainnet . JPMorgan analysts warned that this shift could lead to lower transaction fees and validator revenues, ultimately weakening Ethereum’s economic model.

A notable example of this trend is Uniswap’s upcoming migration to Unichain. As one of Ethereum’s largest gas-consuming protocols, Uniswap’s move could significantly impact network activity and fee generation.

Despite the current bearish outlook, Ethereum still has the potential to regain momentum. Key on-chain metrics suggest some positive signs, such as a recent decline in exchange net flows, which indicates a shift toward self-custody and reduced selling pressure.

However, unless Ethereum can reclaim major resistance levels and attract renewed demand, further losses could be on the horizon. For now, all eyes remain on the $2,400 support level on the daily chart.