While Ethereum’s price action shows a mixed picture at the start of the year, a deeper look reveals a network hitting new fundamental peaks in technology and usage. The divergence between robust on-chain metrics and short-term price movement presents a compelling narrative for the leading smart contract platform.
Price Action: A Pause in Momentum
Ethereum has entered a phase of consolidation following an initial January rally. Despite recent slight declines on a daily basis, ETH remains in positive territory for the week and has posted a gain of nearly 5% since the year began. Trading around $3,150, the cryptocurrency sits approximately one-third below its 52-week high yet remains significantly above last year’s low—a pattern characteristic of a market reorienting itself after a substantial recovery.
Record-Breaking Network Activity
Contrasting with the price, which remains below its August 2025 all-time high, Ethereum’s on-chain metrics paint a picture of unprecedented adoption and use.
Transaction Volume Surges: Daily transactions climbed to a record 2.23 million in late December 2025, representing a 48% year-over-year increase in activity. The 7-day average also reached a new peak of 2.023 million transactions on January 4, 2026.
User Growth Hits New Highs: The number of active monthly addresses rose to 10.4 million in December 2025, setting a new record. During the same period, the count of unique daily sender and receiver addresses surpassed the one million mark.
Stablecoins Drive Economic Activity: Stablecoin transfer volume on Ethereum exceeded $8 trillion in the fourth quarter of 2025, nearly double the volume seen in the second quarter. The total stablecoin value settled on the network grew 43% in 2025, from $127 billion to $181 billion. Ethereum now underpins roughly 57% of all stablecoins issued globally.
Dominance in Tokenized Real-World Assets (RWA): Ethereum maintains its leadership in the tokenization of real-world assets like bonds and real estate. It accounts for about 65% of the total on-chain RWA value, estimated at $19 billion. When including Layer-2 networks and other EVM-compatible chains, Ethereum’s ecosystem commands over 70% of this market.
Strategic Upgrade Enhances Scalability Roadmap
A key technical development occurred on January 7th with the completion of Ethereum’s second “blob parameter” upgrade. This adjustment involved:
* Raising the blob target from 10 to 14.
* Increasing the maximum blob limit from 15 to 21.
Blobs are data units used by rollups to post transaction data to Ethereum, allowing for cheaper settlement without compromising the network’s security. By expanding blob capacity, Layer-2 networks can process more data and transactions cost-effectively.
Major beneficiaries of this increased capacity include:
* Optimistic Rollups: Base, Arbitrum, Optimism, Mantle
* Zero-Knowledge Rollups: zkSync Era, StarkNet, Scroll
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This upgrade mitigates potential fee spikes for users when blob space becomes scarce and serves as a preparatory step for “Fusaka” (Fulu-Osaka), the next major network growth package following “Pectra.” It reflects Ethereum’s evolving approach of implementing smaller, targeted adjustments to data availability and throughput, moving beyond infrequent, large-scale hard forks.
Buterin’s Perspective on the Trilemma
Adding to the technical discourse, Ethereum co-founder Vitalik Buterin made a notable statement on January 3rd. He asserted that Ethereum has essentially solved the classic “blockchain trilemma”—the challenge of balancing scalability, security, and decentralization.
Buterin highlighted two core components:
1. PeerDAS (Peer Data Availability Sampling): Already active on the mainnet, this technology allows the network to handle significantly more data without requiring every node to download everything, enhancing scalability without the centralization pressures of traditional “big-block” approaches.
2. zkEVMs: Although still in the alpha stage, Buterin stated that Zero-Knowledge EVMs have reached a quality suitable for production use. They enable efficient block verification using zero-knowledge proofs, marrying security with scalability.
He cautioned that security “hardening” is ongoing, but emphasized that the fundamental mechanisms to address the trilemma are already implemented in live systems.
Institutional Flows and Macro Influences
Institutional investor behavior presents a nuanced view. Data from SoSoValue indicates spot Ethereum ETFs recently experienced weekly net outflows of $161 million, signaling short-term caution.
However, the longer-term trend is decidedly positive. According to CoinShares, Ethereum products attracted a total of $12.7 billion in capital inflows during 2025. This represents a 138% increase over the previous year and was the strongest growth among digital assets.
The broader market context remains a key driver. Weaker U.S. economic data, including a disappointing December private payroll increase of 41,000 jobs versus an expected 50,000, has bolstered expectations for potential Federal Reserve interest rate cuts later in the year. Analysts at payment provider B2BINPAY classify cryptocurrencies as risk assets whose sentiment is heavily influenced by Bitcoin, with macroeconomic factors being a central driver. A post-holiday “reset” is also a factor, following a December characterized by a narrow trading range and low liquidity.
Technical Outlook and Conclusion
From a wider technical perspective, Ethereum continues to trade notably below its August 2025 all-time high near $5,000. Year-to-date, the price is slightly negative compared to early January 2025, though it has more than doubled from the 52-week low recorded at that time. With a Relative Strength Index (RSI) of 42, the market is in neutral territory without clear overbought or oversold signals. The price holding above the 50-day moving average supports the thesis of a consolidation phase following an advance.
In summary, Ethereum’s current price movements reflect a market consolidation rather than network weakness. The fundamental case is robust, supported by a strategic scalability upgrade, record on-chain usage across multiple vectors, and strong long-term institutional interest. While macroeconomic narratives may dominate short-term price action, the confluence of technological progress, high network utility, and growing adoption forms a solid foundation for Ethereum’s long-term valuation.
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