The market's confidence in Ethereum seems to be wavering. Coupled with the hidden costs of the Layer2 wars and the siphoning effect of the Solana Meme economy, Ethereum's future path appears increasingly unclear amid various controversies.
"The perennial number two" Ethereum seems out of place in this bull market. Compared to the strength of cryptocurrencies like Bitcoin and SOL, ETH has been hovering around $3000 without progress. Furthermore, the frequent selling of coins by the Ethereum Foundation has sparked strong dissatisfaction within the community. The market's confidence in Ethereum seems to be wavering, compounded by the hidden costs of the Layer2 wars and the siphoning effect of the Solana Meme economy; amidst various controversies, Ethereum's future path appears increasingly unclear.
EF frequently selling coins "loses goodwill"
The Ethereum Foundation (EF) has been intermittently selling ETH, recently selling 100 ETH worth about $307,893. Blockchain analytics firm SpotOnChain data shows this is the Foundation's third ETH sell-off in 2025.
In January of this year, EF sold a total of 300 ETH (as of January 27 data), worth about $981,200. Market observers pointed out that the Foundation's sell-off put pressure on Ethereum's price. As of the time of publication, the trading price of ETH was slightly above $3,000, with a 30-day decline of over 7%.
However, the Ethereum Foundation still holds a large reserve of ETH. According to Arkham Intelligence data, the Foundation holds 269,175 ETH, worth about $817 million.
Meanwhile, on-chain activity on Ethereum is clearly lagging behind other competing chains.
According to DappRadar data, Ethereum's on-chain transaction volume decreased by 38% to $36.5 billion over a week.
In contrast, activity on the BNB Chain surged by 112%, while Solana grew by 36%.
According to DefiLlama data, from January 14 to January 21, Ethereum generated only $46 million in fees. In contrast, Solana charged $71 million in fees, and if you add the contributions from Raydium, Jito, and Meteora, the total during the same period reached $309 million.
Ethereum L2 is criticized as a "Band-Aid": the "division" behind the prosperity.
As ETH's performance falters, the Ethereum Foundation faces severe challenges, with growing calls for innovation and internal restructuring. The rise of competing blockchains like Solana has intensified the necessity for Ethereum to enhance its strength and innovate within the ecosystem to maintain its competitive advantage.
The emergence of Layer 2 solutions such as Optimism and Arbitrum has alleviated congestion and high gas fees on the Ethereum mainnet. However, the competition among these Layer 2s is intensifying, highlighting the issue of ecosystem fragmentation.
Michael Egorov, the founder of decentralized exchange Curve Finance, criticized in a report that L2 is "more like a Band-Aid... and a temporary solution, rather than the foundation for building a sustainable strategy." He emphasized that the Rollup roadmap hinders composability and "leaks" much of ETH's value to L2 tokens and their operating companies.
Ethereum Foundation's Justin Drake shared a post on X last weekend calling for: "Enable native Rollup technology, end the era of fragmented Layer 2."
Crypto research and investment firm Paradigm also calls for reform. The company believes Ethereum's current annual upgrade plan limits its ability to innovate and effectively respond to market trends. Paradigm stated, "Accelerating Ethereum's development will enable more people to enjoy the convenience of permissionless innovation and help pave the way for a truly global, trust-minimized financial system."
Facing increasing pressure, the Ethereum Foundation announced plans to allocate 50,000 ETH (approximately $165 million) to support its decentralized finance ecosystem.
Ethereum co-founder Vitalik Buterin stated that the Foundation is indeed undergoing a "significant adjustment" in leadership to improve transparency and better support developers.
Technical analysis: key support and market sentiment game.
The saying goes, in February and March, ETH has historically been bullish.
Coinglass data shows that for the past six consecutive years, ETH has trended upward in February, with the largest increase occurring in 2024, when it rose from $2,280 to $3,380 by the end of the month, an increase of over 46%. March has also historically been a favorable period for ETH. In the past nine years, seven years have seen increases in March, while April has seen increases in six years.
Engineer and analyst Wolf stated on X on January 26: "With eight years of analyst experience, I can confidently say I have never seen a chart as strong as ETH's; the potential here is unparalleled. This is the best asymmetric bet you can make."
Technical analyst Rakesh believes that ETH/USDT may drop to $2,850, which could become a strong support level. If the price rebounds from $2,850 but falls below the 20-day moving average ($3,308), it indicates that bears are selling on the highs. This increases the risk of breaking below $2,850. If this occurs, the trading pair may drop to $2,400.
Time is running out for the bulls; if they want to stop the decline, they must push the price back above the 50-day moving average ($3,455), and then ETH/USDT may continue to rebound to $3,745.
In summary, as Solana reconstructs traffic entry with Meme coins, Layer 2 becomes a value extraction machine, and Ethereum's moat seems to be severely eroded. Technical advantages must be converted into ecosystem dominance; every loss of price support could trigger a collapse of faith. Where Ethereum will head is something time will tell us.
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