As the year draws to a close, Ethereum presents a complex and contradictory market picture. The world’s second-largest cryptocurrency is struggling to gain upward momentum, repeatedly failing to breach the psychologically significant $3,000 threshold. This stagnation persists even as the network continues to attract new users, with the primary pressure stemming from a significant pullback by institutional money.
Capital Flight from Spot ETFs
Recent data highlights a substantial shift in institutional sentiment. U.S. spot Ethereum ETFs recorded net outflows exceeding $600 million in a single week toward the end of December. The most significant contributor to this trend was BlackRock’s iShares Ethereum Trust, which alone saw withdrawals of approximately $470 million.
Market analysts interpret this movement as a clear de-risking strategy ahead of the new year. Major investors are trimming their exposure to risk assets, opting to wait on the sidelines for greater macroeconomic certainty or clearer regulatory guidelines. The absence of this substantial buying power from the traditional finance sector leaves Ether’s price particularly vulnerable to volatility in the spot market.
On-Chain Metrics Flash a Warning
Beneath the surface, on-chain analytics reveal a troubling divergence between network valuation and actual use. A key metric, the Network Value-to-Transactions (NVT) ratio, has surged to its highest level in 16 months. Comparable to a high price-to-earnings ratio in equities, this suggests the asset’s market valuation has become elevated relative to its underlying transaction volume.
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This disconnect is further emphasized by user activity. While the network is adding nearly 163,000 new wallets daily, this growth appears superficial. Engagement from these new retail users remains low, with limited interaction observed with decentralized finance (DeFi) protocols or decentralized applications (dApps).
Technical Resistance and Near-Term Outlook
Despite positive developments from Ethereum’s recent “Fusaka” upgrade and the planned “Glamsterdam” update for the first half of 2026, price action dominates the current narrative. From a chart perspective, the area around $3,050 has solidified as a formidable resistance zone. Failure to break above this level increases the risk of a retracement toward the $2,798 support level.
Short-term trading conditions are likely to be dominated by caution. The combination of typically lower holiday liquidity and year-end tax-related selling creates a challenging environment. In the absence of a resurgence in institutional inflows or a meaningful revival in DeFi activity, Ethereum is expected to remain range-bound, with the risk of further downward pressure lingering.
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