Ethereum Is Inflationary Again, and 59% of Traders Think It Will Lose Number Two Spot in 2026

Ethereum is closing March around $2000, still under pressure after a rough quarter. 

Data from CryptoRank shows ETH ended Q1 2026 down 32.8%, despite a small 1.3% bounce in March. 

The drop came from a mix of market forces hitting at once:

The AI Proxy Trap (February Meltdown)

First, Ethereum started behaving like a tech stock. Its correlation with the Nasdaq jumped to 0.82 during February, meaning when tech corrected, ETH fell even harder. Investors treated it as a high-risk “AI proxy” rather than a core crypto asset.

The $3,000 → $1,473 Liquidation Cascade

Second, a massive liquidation event made things worse. Once ETH lost the $3,000 level, over $5.4 billion in leveraged positions were wiped out. This triggered forced selling, pushing the price down rapidly to a low near $1,473. With liquidity already thin, the fall became sharper than expected.

The “Inflationary” Identity Crisis

Ethereum’s own upgrades also played a role. Improvements like EIP-4844 reduced fees and made the network more efficient, but they also cut the burn rate. For 42 days in Q1, ETH supply actually increased.

This weakened the “ultrasound money” perspective that many investors relied on, reducing confidence at higher price levels.

Geo-Politics in the Mix

Global conditions added another layer. Rising oil prices and inflation fears pushed markets into a defensive mode. Capital moved into traditional assets like gold, while crypto saw reduced inflows.

For the first time in years, Ethereum’s “digital asset” narrative failed to compete with real-world commodities.

How Low Can ETH Go and What About April?

As per Coindcx prediction, short-term projections hint the ETH Price could drop toward $1,900 if support breaks. On the upside, reclaiming $2,120 could open a move toward $2,200. On the top, Polymarket, traders now see a more than 59% chance that Ethereum could lose its No. 2 spot in 2026, up sharply from just 17% at the start of the year.

For April, expectations remain low. ETH is likely to trade between $1,900 and $2,250. A break above $2,250 would signal strength, while failure to hold $1,900 could extend the downside.