Ethereum Network Upgrades Promise Speed Boost While Price Tests Critical $2,800 Support
The second-largest cryptocurrency by market capitalization, Ethereum, is in a precarious position as it has dropped 4.2% in the last day and
Quick overview
- Ethereum has dropped 4.2% in the last day, currently trading above $2,800, amid growing sell pressure and declining on-chain activity.
- Developers are preparing to increase Ethereum's gas limit from 60 million to 80 million units, which could enhance network throughput and reduce transaction fees.
- On-chain metrics reveal a decrease in weekly active addresses and transactions, indicating reduced engagement from both institutional and retail traders.
- Technical analysis suggests Ethereum is at risk of further declines, with potential support levels around $2,716 and $2,623 if selling intensifies.
The second-largest cryptocurrency by market capitalization, Ethereum ETH/USD, is in a precarious position as it has dropped 4.2% in the last day and is currently trading above $2,800. Investor confidence is being tested in the near future by growing sell pressure and dwindling on-chain activity, even as engineers prepare major network enhancements that might double transaction speeds by January.
Ethereum’s Gas Limit Expansion Set to Enhance Network Throughput
After the blob parameter-only hard fork on January 7, Ethereum developers are getting ready to raise the network’s gas cap from 60 million to 80 million units. Nethermind representatives said they were prepared to move forward with the upgrade following the hard fork, pending confirmation at the January 5 All Core Developers meeting, according to Christine Kim, vice president of Galaxy Digital’s research team.
By directly increasing the amount of transactions and smart contract activities that can be processed in a single Ethereum block, the gas limit increase might reduce transaction fees while increasing throughput. But first, two client-level optimizations are needed, according to Ethereum Foundation developer Barnabas Busa: the max blobs flag on the consensus layer and partial blob answers on the execution layer.
With three successive increases throughout the course of the year, Ethereum’s gas limit increased from just 30 million in February to the current 60 million, indicating the continuation of an aggressive scaling plan. Ethereum’s standing as a safe settlement layer has been greatly enhanced by the developer community’s ambitious goal of reaching 180 million by the end of 2026.
ETH On-Chain Metrics Reveal Weakening Network Engagement
Ethereum’s foundations are deteriorating in a worrying way, despite encouraging technical advancements. The number of weekly active addresses fell to just 324,000 in December, the lowest since May, from almost 440,000 earlier in the quarter. The number of transactions has also fallen to mid-year lows, suggesting that fewer institutional and retail traders are participating.
Price pressure has increased because to the withdrawal from U.S. spot Ethereum ETFs. Over $224 million in successive outflows, mostly from BlackRock’s ETHA fund, was revealed by data from SoSoValue. Total net assets across U.S. spot ETH ETFs have shrunk by over $3 billion since mid-December, indicating that institutions are methodically lowering their exposure rather than building up during the decline.
The selling wave has been aided by large holders; according to on-chain data, whale wallets have recently liquidated over 28,500 ETH, totaling over $80 million. One of the biggest liquidations in recent months, totaling over $200 million, was brought on by the 12% drop that occurred last week.
ETH/USD Technical Analysis Points to Further Downside Risk
Technically speaking, Ethereum prices are still below important moving averages and are stuck in a medium-term decline. Persistent negative control was indicated on Wednesday as the recent bounce off the uptrend line on Tuesday was unable to surpass the 20-day exponential moving average at $3,066.
Momentum is still skewed favor sellers, as evidenced by the Relative Strength Index’s continued hanging below neutral levels. If ETH is unable to recover from the immediate resistance that has developed between $3,050 and $3,120, it will be vulnerable to another test of current support close to $2,800.
Ethereum Price Prediction: Critical Levels to Watch
Ethereum is being pushed below the uptrend line support by bears, which could lead to a drop toward $2,716 and possibly $2,623 if selling picks up speed. Although purchasers have repeatedly defended the $2,800 level thus far, persistent pressure may force a collapse toward the $2,400–$2,600 range.
Ethereum has to recover the $3,350 resistance level, which would indicate a possible trend reversal, before bulls can take back control. If this barrier is successfully crossed, it may pave the way for $3,659 and finally $3,918 in the near future. However, it seems likely that more downside testing will be necessary before any significant recovery occurs, given the current momentum indications and institutional outflow patterns.
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