As 2025 draws to a close, Ethereum is trading below the psychologically significant $3,000 threshold. The second-largest cryptocurrency by market capitalization finds itself approximately 41% below its August peak, a situation that persists despite notable fundamental advancements within its ecosystem. This disconnect highlights a market grappling with conflicting signals of robust network use and sustained selling pressure.
Record Network Activity Amidst Selling Pressure
On-chain metrics present a picture of vigorous health. Ethereum achieved a historic milestone on December 24, 2025, recording its highest-ever level of network activity. The seven-day average surged to approximately 1.73 million daily transactions, setting a new record. This growth is fueled by expanding Layer-2 network settlements, increased DeFi engagement, and consistent stablecoin transfer volumes.
However, this demand has not yet translated into a deflationary supply dynamic. The daily burn rate of 515 ETH covers only about 20% of new ETH issuance. Concurrently, exchange reserves tell a different story. During the Christmas week, ETH holdings on centralized exchanges grew by roughly 400,000 coins to reach 16.6 million, typically a precursor to potential selling activity.
Institutional Sentiment Sends Mixed Signals
The flow of institutional capital remains a complex narrative. For a second consecutive month, Ethereum exchange-traded funds (ETFs) have experienced net outflows. December alone saw over $564 million withdrawn, following substantial outflows of $1.42 billion in November. The 30-day moving average has indicated consistent capital exit since early November, suggesting a reduction in institutional participation that aligns with broader holiday season liquidity tightening.
Yet, not all major players are retreating. BitMine Immersion Technologies significantly increased its staked ETH position on December 28, adding over 103,000 coins to hold 257,600 ETH (valued at approximately $750 million). The firm now controls more than 4 million ETH collectively, ranking it among the world’s largest institutional holders. Meanwhile, other notable investors are repositioning: Erik Voorhees, founder of Venice AI, converted nearly $5 million worth of ETH into Bitcoin Cash, while Arthur Hayes has been shifting capital from Ethereum into select DeFi projects.
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Tokenization Emerges as a Core Growth Narrative
A fundamental pillar of Ethereum’s long-term value proposition is the tokenization of real-world assets (RWA). This sector witnessed explosive growth in 2025, expanding from $5.6 billion to an estimated $18.9 billion. Ethereum dominates this space, hosting over $12 billion of these tokenized assets and outpacing competitors like Solana and BNB Chain. The network also supports stablecoins with a combined value of around $170 billion.
Industry observers point to this trend as a key future driver. Tom Lee of Fundstrat projects a price target between $7,000 and $9,000 for the first half of 2026, citing increasing blockchain adoption within traditional finance. Significant developments, such as the DTCC’s announcement to tokenize U.S. Treasury securities on the Canton blockchain, underscore this transformative potential.
Technical Picture Suggests Continued Fragility
From a chart perspective, Ethereum is currently confined to a narrow trading band between $2,900 and $3,000. Technical analysts note that the rally from the November lows appears corrective in nature. A sustained breakout above $3,500 would be required to open a path toward the $4,000 level. Conversely, a breach of the key support at $2,620 could trigger a decline toward $2,250.
The market environment remains volatile, with over 40% of ETH holdings currently at a loss and elevated leverage ratios across derivatives markets. While the successful implementation of the Fusaka upgrade in early December demonstrates continued technical progress, its translation into price appreciation will likely depend on a reversal of institutional fund flows in the new year.
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