A wave of intense selling pressure hit Ethereum in early February 2026, driving a sharp decline in its market value. The world’s second-largest cryptocurrency shed nearly 20% of its price in a matter of days, tumbling from above $3,000 to approximately $2,300. This dramatic price action, however, stands in stark contrast to the resilience displayed by key network metrics and developer sentiment, presenting a complex picture for market participants.
A Cascade of Market Sales
The downturn was precipitated by several significant transactions. On February 2, a prominent early Bitcoin investor moved 121,185 ETH, valued at roughly $292 million, to the Binance exchange. This followed a major liquidation event on the Hyperliquid decentralized platform, where positions worth $230 million were closed out. In a separate move, the subsidiary of LD Capital sold 30,000 ETH to repay loans and reduce its leverage exposure.
The collective impact was severe: Ethereum’s total market capitalization dropped by over $30 billion in a single day towards the end of January, falling to around $299.79 billion.
Underlying Network Health Remains Strong
Despite the price collapse, fundamental indicators for the Ethereum blockchain tell a different story. Sam Ruskin, an analyst at Messari, pointed out to CoinDesk that the Total Value Locked (TVL) on Ethereum, when measured in ETH terms, is hovering near its all-time highs. This suggests users are not withdrawing their capital from decentralized finance (DeFi) protocols, even as its U.S. dollar equivalent has decreased.
Perhaps more telling is the validator queue, which currently requires a wait of about 70 days to activate new validators. This sustained demand indicates that institutional players continue to commit ETH to staking, signaling long-term confidence in the network’s security model. Mike Silagadze, CEO of the restaking network ether.fi, reinforced this view, stating, “We continue to grow, adding users and generating revenue. The token price is lagging, but our focus is on the long term.”
Developers Dismiss Volatility as “Noise”
From a builder’s perspective, the recent price action is seen as a temporary disturbance. Marcin Kazmierczak, head of blockchain data firm RedStone, characterized the decline as mere market “noise,” noting that institutional conviction surrounding on-chain finance is at an unprecedented level he hasn’t witnessed before.
Should investors sell immediately? Or is it worth buying Ethereum?
Echoing a long-term outlook, Ethereum Foundation core developer Marius Van Der Wijden referenced historical precedent: “As we saw with the Merge, the market is quite poor at pricing in fundamental technical realities.” He observed that technical advancements are often reflected in asset prices only after a delay of several months.
Development Roadmap Stays on Track
Ethereum’s protocol development continues unabated, with two major upgrades slated for 2026. The first half of the year will see “Glamsterdam,” which includes improvements such as a clearer separation between block building and proposal. “Hegota” is planned for the second half and may introduce Verkle Trees, a technology designed to significantly reduce the storage requirements for network nodes.
This schedule reflects a strategic shift towards more frequent, incremental updates rather than relying on monolithic annual upgrades, accelerating the pace of innovation.
The Growing Disconnect Between Price and Fundamentals
Messari’s Sam Ruskin attributes Ethereum’s price drop less to network-specific issues and more to broader market movements and Bitcoin’s performance. In his assessment, the network itself “looks as healthy as ever.”
The coming weeks will test whether institutional investors share this fundamental assessment or if further profit-taking will continue to weigh on Ethereum’s price, highlighting the current divergence between its market valuation and its underlying technological strength.
Ad
Ethereum Stock: Buy or Sell?! New Ethereum Analysis from February 3 delivers the answer:
The latest Ethereum figures speak for themselves: Urgent action needed for Ethereum investors. Is it worth buying or should you sell? Find out what to do now in the current free analysis from February 3.
Ethereum: Buy or sell? Read more here...