Following a challenging period marked by significant ETF outflows and price corrections, Ethereum appears to be turning a corner. The catalyst is a major network upgrade, whose successful implementation has injected fresh optimism into the market. This technical milestone raises a critical question for investors: does this signal the start of a sustainable scalability-driven rally, or will its impact be diluted by ongoing volatility?
A Foundation of Strengthened Fundamentals
The immediate cause for the renewed positive sentiment is unequivocally technical. The much-anticipated “Fusaka” upgrade was deployed to the mainnet without incident, serving as a direct catalyst for the asset’s recent price appreciation. The market is rewarding the network’s enhanced potential, specifically the implementation of PeerDAS, which theoretically increases data throughput for Layer-2 solutions by a factor of eight. The core objectives—reducing transaction costs and alleviating network congestion during peak times through an increased gas limit—are now within closer reach.
This smooth technical execution prompted an immediate market response. After testing lower support zones in November, Ethereum’s price has now broken through key resistance levels. Currently trading at $3,203.21, the cryptocurrency has decisively moved away from its recent lows. Traders are now eyeing subsequent technical targets, provided the newfound support holds. The overall mood has perceptibly shifted from caution to optimism, fueled by expectations of a resurgence in DeFi activity leveraging these new capabilities.
Should investors sell immediately? Or is it worth buying Ethereum?
On-Chain Data Presents a Nuanced View
Beyond the price charts, however, the on-chain narrative is more mixed. A significant headwind remains from November, when institutional investors withdrew approximately $1.4 billion from Ethereum-based ETFs—a pressure test the market is still processing. Counterbalancing this, a strong fundamental signal emerged: the number of new network addresses grew by over 13% last week.
This growth suggests renewed interest from retail investors, coinciding neatly with the upgrade, while nearly one million validators continue to secure the network. Although long-term holders engaged in some profit-taking during the recent uptick, such activity is typical during transitional phases between market cycles.
The technical groundwork for a potential rally has been laid. The next challenge for Ethereum is to demonstrate that these improved capacities can translate into sustained on-chain economic activity. If the asset can consolidate around current levels, the path toward retesting its yearly highs may once again become accessible.
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