Ethereum is facing a sharp disconnect between market sentiment and on‑chain usage. The token slipped to a demand zone near $2,300 this week, its weakest level since mid‑2025, yet network activity has never been higher. Analysts at Goldman Sachs describe the situation as a “market vs. network divergence,” where valuation is sliding even as adoption accelerates.
Record On‑Chain Engagement
January 2026 set new records for Ethereum. 427,000 new addresses were created daily, eclipsing the 162,000 peak seen during the 2020 DeFi Summer. Daily active addresses averaged 1.2 million, up 27.5% month‑on‑month, while transactions climbed 36%. The surge suggests that despite falling prices, users continue to rely on Ethereum for decentralized applications, payments, and tokenized assets.
Market Stress
At the same time, Ethereum’s market cap has dropped below its realized cap, meaning the average holder is sitting on losses. Technical analysts point to the $2,300–$2,500 range as a critical zone of demand. A recovery above $2,800 would be required to restore bullish momentum, but for now, ETH remains under pressure.
Institutional Signals
Goldman highlights several factors that could determine whether Ethereum rebounds. ETF inflows are seen as the most important driver of sustained recovery, while the evolution of staking products — including fully staked ETFs emerging in Europe — could add institutional demand. The macro backdrop may also help: Goldman projects 11% equity returns in 2026, a supportive environment for risk assets if confidence returns.
Outlook
For traders, the $2,200 level is shaping up as the final line of defense before ETH risks sliding under $2,000. If volume and demand return, Ethereum could bounce back above that zone. If not, the bearish divergence between price and network activity may deepen further.
