"This may be another factor in the Fermi Paradox: Can life that exists in the water ever develop
technology, or are they like our cetaceans at best?"

Well, it's going to be hard to discover fire.

But what is technology?
Why do we have technology and what's the difference and relationship between technology and art?
The land dwelling Earthlings refer to evolutionary ages of Stone, Copper, Bronze, and Iron in regards to technology and it's history- or improvements in weapons and fire related.
Is technology related to warfare as many claim it is?

One could say that technology is about doing things in easier and/or effective manner. So if lions had an easier way to get an antelope that could be technology. Though we usually mean, the ways of making "things" that would allow us to something easier or more effective and the how do stuff as knowledge, skill, craft, and/or art. So a lion's knowledge or way of sneaking up down wind to a prey isn't technology, instead we call it result of trial and error and something taught to lion clubs. If lions dig a pit that antelopes can fall in- that is technology.

But more important than "what" is "why" do we develop technology, and therefore why would cetaceans develop technology.
The why is related to need and desire. Developing technology and passing down of the knowledge of technology requires considerable effort.
Take farming. If what you need is large quantities of food, farming is easier than gathering food "in the wild".
Though before one can farm one will need to be able to defend your farm from other humans or other creatures eating your crop. It's easier to simply take food than make the food.
So, you aren't going to have farming without laws and rules and ways to enforce these laws.
So, you first have to have rules and laws, then things like farming can occur.
What we know as laws are extremely "advanced" in terms of social organization.
[So for example the cetaceans would *have to* have things like lawyers. And things like priests.]

What you could call "over population" is required from farming- people who need food. And a farmer willing or desiring to work to make them food in order to get something the farmer wants in return. So it's required that large quantities of food are needed for farms and that technology to exist.

So, the cetaceans are going to need large number of cetaceans who work for food and other things needed or desired. The more needed and desired the more technology will be developed to meet these needs and desires- assuming there isn't barriers to doing this. And these "barriers" can mostly be summarized as how stupid the cetaceans are- mostly in terms of their social organization.

Any social organization is primarily involved with protecting it's members. Sister ants protect their Queen.
Primates protect their offspring- as do other mammals, and as do any advanced lifeform. Humans have a very long childhood. Probably the cetaceans would also need to have a long childhood or perhaps simply be more intelligent than humans.

Finally, is fire needed? Obviously without plants making oxygen, humans or animals couldn't exist- nor could fire.

The cetaceans could perhaps discover electricity and electricity works underwater. And electricity can do just about anything fire can do.
If the world had no land, then there could no need to survive out of the ocean, but with large population there could be need to mine the sea floor, for farming purposes- to fertilize the crops.
Now, if war is included, one could see a reason why the cetaceans might want to leave the water and travel through the air. And then traveling through the air might be seen as a faster way of traveling than possible thru the water. The atmosphere could have something the cetaceans need, so they could mine the sky.
They could living on a planet which has periodic impactors which could be something which interests them- perhaps because it kills billions of them.

Anyways, I would say the requirements are long childhood and/or big brains, and "over population".