Why did the price of ETH fall?

Ethereum (ETH) dropped 4.43% to $2,952.85 in the past 24 hours, underperforming the overall crypto market, which fell 2.12%. The main reasons behind this decline are:

1. Geopolitical Concerns – Tariff threats from former President Trump caused investors to move money into gold, leading to a selloff across cryptocurrencies.
2. Leverage Unwinding – $392 million worth of ETH long positions were liquidated in 24 hours, pushing prices down further.
3. Technical Breakdown – ETH fell below the important $3,000 support level, triggering automatic sell orders.

Detailed Analysis

1. Macro Risk Aversion (Negative Impact)

Summary:
On January 20, former U.S. President Trump threatened to impose tariffs of 10-25% on eight European Union countries due to disputes over Greenland. This increased geopolitical tensions to their highest level since April 2025. As a result, the S&P 500 dropped 2.06%, and the Nasdaq fell 2.4%. Because cryptocurrencies are considered risky assets, they were also affected.

What this means:

• Gold prices jumped 2.3% to a record $4,874 per ounce, while Bitcoin and Ethereum dropped 9% and 7% respectively over two days (source).
• Ethereum’s price is closely linked to tech stocks (with a correlation of 0.82 to the Nasdaq), making it vulnerable when traditional markets sell off.

What to watch:
The European Union plans to respond with €93 billion in retaliatory tariffs. If no agreement is reached, risk-averse behavior in markets could continue.

2. Derivatives Market Selloff (Negative Impact)

Summary:
Ethereum experienced $392 million in liquidations of long positions within 24 hours, the second-largest among cryptocurrencies after Bitcoin. This happened after ETH’s price fell below $3,000, a key support level that had held since July 2025.

What this means:

• Funding rates for major altcoins turned negative, indicating that traders who borrowed money to buy ETH are being forced to sell (source).
• According to Glassnode data, over 40% of Ethereum’s supply is currently held at a loss, which increases the likelihood of more selling from investors trying to cut losses.

Important detail:
A large number of stop-loss orders are clustered around $2,900. If ETH falls below this level, it could trigger a wave of automatic sell orders, pushing prices down even more.

3. Technical Breakdown (Bearish Outlook)

Summary:
Ethereum’s price dropped below its 30-day simple moving average (SMA) of $3,102 and the 23.6% Fibonacci retracement level at $3,277. This signals a bearish trend on shorter timeframes.

What this means:

• The Relative Strength Index (RSI) is at 37.83, suggesting there is still room for prices to fall before ETH becomes oversold.
• The MACD indicator shows increasing bearish momentum.
• The next support levels to watch are the 38.2% Fibonacci retracement at $3,203 and the 200-day SMA at $3,663.

Key level:
Ethereum needs to close above $3,143 (the 50% Fibonacci retracement) on the daily chart to reverse the bearish trend.

Conclusion

Ethereum’s recent price drop is mainly due to a broader market risk-off event, worsened by excessive leverage and technical weaknesses. Although the Fear & Greed Index is at 32, indicating panic selling, there are no Ethereum-specific problems driving this decline. This suggests the selloff is more about overall market liquidity than issues with the Ethereum network itself.

What to monitor:
Watch if ETH can hold above the $2,888 swing low from December 2025. Falling below this level could lead to further losses toward $2,600.

What could affect the price of ETH?

Ethereum’s price depends on three main factors: upcoming protocol upgrades, momentum around exchange-traded funds (ETFs), and the growth of real-world asset tokenization. Big investors, often called “whales,” are betting heavily on all three.

1. Upcoming Upgrades – The Fusaka upgrade (expected December 2025) aims to cut transaction fees by 95%.
2. Regulatory Approvals – The SEC’s decision on staking ETFs could open the door to over $4 billion in new investments.
3. Institutional Buying – Large investors added 934,000 ETH in December 2025 alone.

Deep Dive

1. Protocol Scalability Push (Positive Outlook)

What’s happening: The Fusaka upgrade, scheduled for December 3, 2025, will increase Ethereum’s data capacity through a technology called PeerDAS. This will allow Layer 2 networks like Arbitrum to handle over 12,000 transactions per second (TPS). This follows a successful test in October where transaction fees dropped to just $0.12.

Why it matters: Past upgrades, like the Dencun update in March 2024, led to a 48% price increase for Ethereum. If Fusaka delivers an 8x increase in data capacity as promised, Ethereum could strengthen its position in decentralized finance (DeFi) and attract more business use.

2. Staking ETF Approval (Mixed Outlook)

What’s happening: Investment firms BlackRock and VanEck filed updated applications in November 2025 to offer ETFs that include staking rewards on spot Ethereum holdings. The SEC Chair’s July 2025 statement recognizing Ethereum as a commodity has increased the chances of approval to about 75%, according to Bloomberg.

Why it matters: Approval could bring in $3.8 billion in new investments in early 2026 (according to Bitwise). However, the SEC has concerns about products that generate yield, which might delay launches. Also, past experience with Bitcoin ETFs shows that approval doesn’t always lead to immediate demand—after the Bitcoin ETF launch, the Grayscale Bitcoin Trust (GBTC) saw $6.3 billion in outflows.

3. Real-World Asset (RWA) Tokenization (Positive Outlook)

What’s happening: Ethereum currently hosts 74% of tokenized assets, totaling $201 billion in value locked (TVL). This includes BlackRock’s BUIDL Treasury fund. Citi predicts tokenized assets could reach $5 trillion by 2030. Each $1 billion invested in tokenized assets could increase Ethereum’s price by about 0.8%, thanks to more ETH being staked or locked up.

Why it matters: As companies like JP Morgan and Visa build payment systems on Ethereum, ETH’s role as collateral could reduce the amount available on the market. However, competitors like Solana, which has seen 326% growth in tokenized assets this year, pose a challenge to Ethereum’s dominance.

Conclusion

Ethereum’s path in 2026 will depend on successfully rolling out technical upgrades while navigating new financial products from Wall Street. A key indicator to watch is the staking participation rate, which is currently 26% of the total ETH supply. If Fusaka’s efficiency improvements push this to 35%, it could create a shortage of available ETH, potentially driving prices higher. The big question remains: will Ethereum’s upgrades outpace the scalability solutions offered by rival blockchains?

What are people saying about ETH?

Ethereum’s community is torn between optimism for a technical breakout and concerns about a possible price drop. Here’s what’s happening right now:

1. Some analysts are targeting $3,500 as a near-term price goal.
2. Bearish signals suggest the price could fall below $2,800.
3. Large withdrawals from exchanges hint that big investors are buying and holding.

In-Depth Look

1. @CapitalTA: Long-term target of $6,300

“If Ethereum reaches $6,300, it would mean a strong upward move driven by big investors and the 2026 market cycle.”
– @CapitalTA (5.7K followers · 1.6M impressions · 2026-01-13 16:18 UTC)
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What this means: This is a positive outlook for Ethereum, linking big investor interest to a multi-year growth trend. However, it depends on Ethereum staying above the $2,800 to $3,000 support range.

2. @KlondikeAI: Bearish flag suggests a 3% drop

“Short Ethereum at $2,963; target $2,879. The bearish flag pattern on the 1-hour chart shows strong selling pressure.”
– @KlondikeAI (3K followers · 7.7K impressions · 2025-12-31 17:00 UTC)
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What this means: This is a short-term warning that Ethereum’s price could fall to the $2,800–$2,900 range, which is an important area for traders looking to buy or sell quickly.

3. @dizaynland: $3,500 breakout expected in 4-6 weeks

“Ethereum is trading at $3,315 with a neutral RSI. Momentum suggests it could reach the $3,500 resistance level soon.”
– @dizaynland (1.4K followers · 258K impressions · 2026-01-18 09:54 UTC)
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What this means: This is a positive sign if Ethereum stays above $3,200, but the neutral RSI (Relative Strength Index) means the price could still be volatile.

Summary

The outlook for Ethereum is mixed. On one hand, there are strong technical targets suggesting price gains. On the other, short-term bearish signals and broader economic uncertainties create caution. Exchange reserves are at multi-year lows, which often means big investors are accumulating Ethereum. Traders are watching closely for a clear move above $3,200 or a drop below $2,900 to decide the next direction. The $3,000 level is especially important—holding above it could support the idea of a long-term upward trend.

What is the latest news about ETH?

Ethereum is seeing increased interest from big investors and hitting important technical milestones, even as the amount of ETH held on exchanges drops to record lows. Here’s a quick summary of the latest developments:

1. Big Investors Pour In (January 21, 2026) – $496 million flowed into Ethereum investment products despite regulatory challenges.
2. ETH on Exchanges Hits 8-Year Low (January 21, 2026) – The amount of Ethereum held on trading platforms has dropped to its lowest point since 2016, indicating more people are holding their ETH long-term.
3. Galaxy Digital’s $100 Million Hedge Fund (January 21, 2026) – This new fund focuses on Ethereum and Solana, using both long and short investment strategies.

In-Depth Look

1. Big Investors Pour In (January 21, 2026)

What happened: Institutional investors put $496 million into Ethereum products during the week ending January 21. This was the second-largest inflow after Bitcoin’s $1.55 billion. This investment came despite proposed U.S. Senate regulations under the CLARITY Act, which aim to limit earnings from stablecoins and could affect decentralized finance (DeFi) activities.
Why it matters: This shows strong confidence in Ethereum from large investors, boosting its credibility and liquidity. However, regulatory risks remain a concern. Overall, it suggests Ethereum is seen as a key digital asset even amid economic uncertainties (DailyHODL).

2. ETH on Exchanges Hits 8-Year Low (January 21, 2026)

What happened: The total Ethereum held on exchanges dropped to 16.2 million ETH, the lowest since 2016. Binance alone saw 168,000 ETH withdrawn in the past month, according to CryptoQuant data.
Why it matters: Fewer coins on exchanges means less selling pressure, which could lead to price increases if demand picks up. This trend also reflects more people using staking (earning rewards by locking up ETH), DeFi platforms, and holding their own coins securely, aligning with Ethereum’s move to a proof-of-stake system (CryptoQuant).

3. Galaxy Digital’s $100 Million Hedge Fund (January 21, 2026)

What happened: Galaxy Digital launched a hedge fund that can invest up to 30% in cryptocurrencies like Ethereum and Solana, alongside traditional stocks. The fund uses both long (betting prices will rise) and short (betting prices will fall) strategies, focusing on opportunities created by regulations and technology.
Why it matters: This is generally positive for Ethereum, showing confidence from a major player. However, the fund’s ability to short assets adds complexity to the market outlook (CoinTelegraph).

Conclusion

Ethereum is balancing growing demand from big investors and a shrinking supply on exchanges against regulatory uncertainties and a cautious market (ETH has dropped 11% over the past week). The big question is whether upcoming upgrades like Fusaka, which aim to improve scalability, and the rise of real-world asset tokenization will help Ethereum overcome broader economic challenges. Keep an eye on ETF inflows and the adoption of Layer-2 solutions for signs of future momentum.

What is expected in the development of ETH?

Ethereum’s development is moving forward with two major upgrades planned for 2026:

1. Glamsterdam Upgrade (First half of 2026) – Improves how many transactions the network can handle at once and raises the gas limit, which means more activity can happen on the blockchain.
2. Hegota Upgrade (Second half of 2026) – Introduces a new technology called Verkle Trees that makes running a node easier and helps keep the network decentralized.

Deep Dive

1. Glamsterdam Upgrade (First half of 2026)

Overview:
Set for early 2026, Glamsterdam aims to make Ethereum faster and more efficient. It will allow transactions to be processed in parallel, meaning multiple actions can happen at the same time instead of one after another. The gas limit—the maximum amount of work the network can do per block—will increase from 60 million to 200 million, allowing more transactions to fit into each block. This upgrade builds on previous improvements like Fusaka’s PeerDAS, which helps manage data more efficiently. The final details were confirmed in January 2026 (CoinMarketCap).

What this means:
This is good news for Ethereum because it could lower fees on Layer 2 solutions (which are built on top of Ethereum) and attract more decentralized apps (dApps). However, the technical challenges involved could cause delays.

2. Hegota Upgrade (Second half of 2026)

Overview:
Planned for late 2026, Hegota focuses on making Ethereum more decentralized and efficient. The key feature is Verkle Trees, a new way to organize data that reduces the storage needs for nodes by about 90%. This means running a node will require less powerful hardware, encouraging more people to participate in maintaining the network. The upgrade might also add features like Fork-Choice Inclusion Lists (FOCIL), which help prevent censorship by ensuring transactions can’t be blocked (NullTX).

What this means:
This upgrade is positive for Ethereum because it lowers the barrier to entry for running a node, which helps keep the network decentralized and secure. However, since it relies on new cryptographic methods, there is some risk involved in implementation.

Conclusion

Ethereum’s 2026 roadmap aims to boost both scalability and decentralization. Glamsterdam will increase how much the network can handle at once, while Hegota will make it easier for more people to support the network. Together, these upgrades could strengthen Ethereum’s role as the foundation for the global Web3 ecosystem.

What updates are there in the ETH code base?

Ethereum’s software received major updates in late 2025 and early 2026 that improved its speed, lowered costs, and boosted security.

1. Fusaka Upgrade Activated (December 3, 2025) – Introduced PeerDAS, increasing data capacity by 8 times and cutting Layer-2 transaction fees significantly.
2. Glamsterdam Upgrade Finalized (January 9, 2026) – Added new features to make block creation more decentralized and reduce fees for frequent contract use.
3. Security Protocol Overhaul (December 4, 2025) – Put new limits in place to prevent attacks that could slow or crash the network.

Deep Dive

1. Fusaka Upgrade Activated (December 3, 2025)

What happened: Ethereum activated Peer Data Availability Sampling (PeerDAS), which boosted the amount of data each block can handle from 6 to 48 blobs. This upgrade lowered Layer-2 transaction fees by about 95% while keeping the network decentralized. Instead of downloading all data, nodes can now verify data using cryptographic proofs.
Why it matters: Lower fees and faster transactions make decentralized finance (DeFi) apps and other Ethereum-based services easier and cheaper to use. Users can enjoy quick, almost free swaps and interactions. (Newsereum)

2. Glamsterdam Upgrade Finalized (January 9, 2026)

What happened: The Glamsterdam upgrade introduced two key features: enshrined Proposer-Builder Separation (ePBS) and Block-Level Access Lists (BALs). ePBS separates the roles of proposing and building blocks, making block production more trustless and secure. BALs help reduce gas fees for contracts that are used repeatedly.
Why it matters: This upgrade makes block creation more decentralized and reduces risks of manipulation (known as MEV). It also lowers costs for complex decentralized apps like decentralized exchange (DEX) aggregators. (Binance News)

3. Security Protocol Overhaul (December 4, 2025)

What happened: Ethereum introduced new limits on how much contract code can be accessed per transaction, capped the cycles used by zero-knowledge EVM provers, and strengthened the EVM memory model. These changes help prevent attacks that try to overload the network’s resources.
Why it matters: These security improvements protect Ethereum from denial-of-service (DoS) attacks without breaking compatibility with existing smart contracts. Users benefit from fewer network interruptions and more predictable transaction costs. (Bitget)

Conclusion

The Fusaka and Glamsterdam upgrades have made Ethereum faster and more affordable, while the new security measures strengthen its defenses against attacks. Looking ahead, future upgrades like Verkle trees promise to reduce the hardware needed to run Ethereum nodes, making the network even more accessible.