Ethereum Faces Mounting Pressure Amid Critical Technical Test

The Ethereum network finds itself under significant strain as its native token, ETH, struggles to maintain footing above key psychological levels. Trading between $2,940 and $2,970 on Friday morning, the asset registered a 24-hour decline of approximately 2%, intensifying the battle for the $3,000 support zone. This price action unfolds against a complex backdrop of institutional accumulation, declining on-chain activity, and a substantial quarterly options expiry.

A major source of immediate pressure is the expiration of crypto options contracts worth a total of $2.3 billion today. Ethereum-specific contracts account for $347.7 million of this total, with roughly 116,000 ETH contracts reaching their expiry. Market mechanics are currently favoring sellers, as the spot price trades well below the "Max Pain" point—the price at which the maximum number of options expire worthless—which is situated at $3,200 for ETH.

While the put/call ratio, ranging from 0.81 to 0.84, indicates a structural bias toward call options, the recent bearish momentum has overwhelmed any bullish sentiment derived from this metric. Traders are now watching to see if the market finds relief once this overhang clears or if the downward trend will persist.

On-Chain Scarcity Contrasts with Weak Demand

Blockchain data presents a markedly different long-term narrative, one of increasing scarcity. On January 23, BitMine staked an additional 171,264 ETH, bringing its total holdings to about 1.94 million tokens. This represents roughly 3.5% of the entire supply, valued at $5.71 billion, as the entity works toward a stated goal of 5%.

Further metrics underscore this tightening supply dynamic:
* A full 30% of all Ethereum in existence is now locked in staking contracts.
* Exchange reserves have plummeted to 16.2 million ETH, a level not seen in eight years.
* The validator entry queue continues to grow while exits remain minimal.

Despite these fundamentally bullish signals, immediate buying interest is absent. This is evidenced by recent spot Ethereum ETF outflows totaling $224.8 million, highlighting a disconnect between long-term holder behavior and short-term market sentiment.

Should investors sell immediately? Or is it worth buying Ethereum?

Layer-2 Success Dampens Mainnet Vitality

The migration of user activity to secondary scaling networks is creating an unexpected headwind for Ethereum's core economic model. Although the "Fusaka" upgrade, deployed in December 2025, was designed to boost data capacity and reduce costs, analysts at JPMorgan note that Mainnet activity is suffering as users flock to Layer-2 solutions.

Approximately 60% of all transactions within the Ethereum ecosystem now occur on networks like Base, Arbitrum, and Optimism. The fee differential is stark: an average of $6.20 on the Mainnet versus just $0.12 on Layer-2. This shift has a direct consequence: less ETH is being burned through the network's transaction fee mechanism, thereby weakening the deflationary pressure introduced by EIP-1559.

Additionally, reported user metrics may be inflated. "Address poisoning" attacks have distorted figures, suggesting the real number of active addresses is closer to 945,000, rather than the reported 1.3 million.

Technical Picture Points to Pivotal Juncture

From a chart perspective, Ethereum has reached a critical technical zone. The failure to hold the $3,000 support level has shifted focus to the next significant floor at $2,880. A breach below this could trigger a slide toward $2,720—a historically significant level considered the cost basis for major holders and a line that has never been broken during previous bull markets.

For the bears to be invalidated and a trend reversal to begin, ETH must first reclaim the $3,050 level and then mount a sustained attack on the $3,200 resistance area.

The prevailing mood remains cautious, as reflected by the Crypto Fear & Greed Index, which oscillates between 24 and 34, indicating "Extreme Fear" to "Fear." The market structure is currently dominated by derivative-related volatility and regulatory uncertainty, even as long-term participants continue to withdraw coins from exchanges and commit them to staking contracts.