Risky assets are stuck between a market bottom and a top.
From a technical perspective, this makes sense. Normally, after about five weeks of sideways trading, top caps show a clear change in direction. What about this cycle though? The market has been going for seven weeks and there is still no confirmed movement.
As a result, the stakes increase as top caps dive deeper into leveraged liquidity. However, Ethereum [ETH] seems to be embroiled in its own internal tug-of-war. Interestingly, that $3k level is now starting to look like a real test.
ETH shows scalability gains amid institutional headwinds
Undoubtedly, Ethereum flipped the script in the fourth quarter, posting a -28.28% return.
In fact, this was ETH’s weakest quarter against Bitcoin [BTC] since the 2019 cycle. Against this backdrop, it is not entirely unreasonable to understand why some are calling Ethereum’s latest round of upgrades a “failure.”
However, the data about the chain tells a different story. Smart contract implementations on Ethereum only reach a record 8.7 million, while average transaction fees dropped to around $0.17 – marking a huge shift from pre-upgrade levels.
Source: EtherScan
To put that into perspective, ETH costs rose to almost $200 in 2022.
Since then, however, fees have remained in a clear downward trend, even after jumping to $8.48 following the October crash that triggered a market-wide liquidation.
Sure, at first glance that could raise scalability issues. However, the data suggested otherwise. Ethereum recently reached 2.2 million daily transactionsshowing that the network can generate higher throughput without increasing costs. What it comes down to? The upgrades were clearly not a failure.
And yet, institutional flows still lean against Ethereum.
Of course, with fundamentals improving but price action lagging, the case of ‘undervaluation’ starts to make sense. Simply put: the market is not fully pricing in the “dip”. But what if institutions have a reason to stay out?
Ethereum’s technical setup is facing a debate over overvaluation
On the technical side, Ethereum shows a textbook performance breakout setup.
ETH has been stuck in a tight $2.7k-$3.2k range for the past six to seven weeks. Still, in-chain activities such as transactions and smart contract implementations remain strong, indicating a potential bottom formation.
However, it’s worth pointing out that ETH ETFs raked in $72 million outflowwith all nine funds sold, ending 2025 in the red. This difference has mainly led to an ‘overvaluation’ debatewith some considering ETH’s $3k level as pricey.
Source: SolScan
From an investor perspective, this argument cannot be ignored.
According to the above chart, Solana [SOL] clocked a total of 232 million transactions, of which approximately 25% were non-voting transactions. Compare that to Ethereum’s 1.2 million, and SOL clearly outperforms on-chain.
Meanwhile, Bitcoin’s fourth-quarter outperformance keeps the country on its ‘digital gold’ path, while ETH continues to lag. Essentially, this market divergence puts a spotlight on Ethereum’s relevance as a decentralized network.
Against this background, the lack of institutional flows is no coincidence.
Instead, it may reflect a strategic investor redeployment in Solanawith smart money viewing Ethereum as relatively expensive compared to faster, more scalable alternatives that also serve as a market hedge.
Final thoughts
- Record smart contract deployments, low fees, and 2.2 million daily transactions highlight the scalability gains even as ETH struggles at nearly $3,000.
- ETF outflows, SOL’s outperformance, and Bitcoin’s fourth-quarter strength suggest that Ethereum could be relatively expensive.