Ethereum’s Diverging Signals: Price Weakness Meets Network Strength

Ethereum CRYPTO000ETH

As the trading week concludes, Ethereum finds itself trading significantly below the crucial psychological threshold of $3,000. This price pressure, sustained over recent weeks, presents a stark contrast to the underlying network metrics, which are painting a picture of unprecedented strength and commitment from long-term holders.

The institutional picture presents a mixed bag. On one hand, data from Bitwise reveals that treasury purchases of ETH surged by 26% in the fourth quarter of 2025 compared to the previous quarter. Asset management giant BlackRock continues to view Ethereum as the primary beneficiary of real-world asset tokenization, estimating its market share in this segment at approximately 65%.

Conversely, Ethereum exchange-traded funds (ETFs) experienced substantial outflows, with a net withdrawal of nearly $230 million recorded on Wednesday alone. In a separate development, the U.S. Department of Justice formally closed its insider trading case against former OpenSea manager Nathaniel Chastain. Following the overturning of his conviction in 2025, prosecutors agreed to a deferred prosecution arrangement, avoiding a retrial.

Record-High Staking and Dwindling Exchange Supply

Fundamental data tells a compelling story of supply constraint. For the first time, the proportion of Ethereum's circulating supply locked in staking contracts has surpassed 30%. Over 36 million ETH are now staked, setting a new all-time high. Simultaneously, the reserves of Ethereum held on centralized exchanges have plummeted to 16.2 million ETH, the lowest level seen in eight years. This dual dynamic effectively removes liquid coins from the available market supply.

The behavior of network participants underscores a long-term bullish sentiment. The queue for new validators continues to grow, while the exit queue for those wishing to unstake remains nearly empty. This trend is further evidenced by significant on-chain purchases, including one wallet that borrowed $70 million in stablecoins via Aave to acquire 24,555 ETH, alongside a separate over-the-counter (OTC) purchase of 10,000 ETH.

Options Expiry Adds Downward Pressure

Trading around $2,945 on Friday, January 23, 2026, Ethereum registered a 24-hour decline of nearly 2.9%. The loss over the preceding week totals roughly 10%. The cryptocurrency now trades approximately 40% below its all-time high of $4,955, reached in August 2025.

Today's market movement is influenced by the expiry of Ethereum options with a notional value of about $435 million. The "Max Pain" price—the level at which the most option holders would incur losses—is situated at $3,100. With ETH trading notably below this point, bearish forces have gained short-term control. From a technical analysis perspective, the next critical support zone lies between $2,850 and $2,860. A decisive break below this level could trigger further downward momentum toward $2,640.

The Fusaka Upgrade's Mixed Legacy

The Fusaka upgrade, implemented in December 2025, successfully reduced transaction fees and propelled daily transaction count to a record 2.88 million. However, analysts at JPMorgan have raised questions regarding the sustainability of this surge. Their report highlights the increasing fragmentation of activity across Layer-2 networks, with Base now generating 60% to 70% of all Layer-2 revenue.

This migration away from the main chain diminishes value accrual for Layer 1. Furthermore, Ethereum continues to cede market share in speculative arenas like NFTs and memecoins to high-throughput blockchains such as Solana.

The pivotal question for Ethereum now centers on the $2,860 support level. If it holds, the combination of tightening supply and sustained institutional interest could pave the way for medium-term price stabilization.