The ongoing market cycle is raising some important questions around L1s.
On a fundamental level, developers have become a key asset for chains, as “scalability” is no longer optional. Put simply, as blockchains move towards real-world utility, prioritizing network security is just as critical.
Looking at Ethereum’s [ETH] 2026 roadmap, it’s clear developers are heading in this direction, from the Fusaka upgrade to the recent BPO fork. Notably, on-chain usage is already starting to reflect the impact.
Source: Farside Investors
That being said, institutions aren’t fully buying into the story just yet though.
Less than two weeks into 2026, BlackRock’s ETHA ETF has seen $200 million in net outflows. Over the same period, Ethereum’s Coinbase Premium Index (CPI) has pulled back sharply into negative territory.
Notably, this disconnect between improving on-chain activity and soft demand now raises a key question – Is this setup another undervaluation opportunity, or is ETH’s “fundamentals-driven narrative” being overstated?
As conditions hold, Ethereum looks like it’s about to find an answer.
Ethereum faces massive liquidation wall on both sides
Risk assets are caught in a volatility loop.
Notably, Ethereum is no exception. From a technical standpoint, ETH has been trading in a tight range for around seven weeks – A setup that often creates a liquidity cluster as traders position for a directional move.
Against this backdrop, the question is whether Ethereum’s growing on-chain activity can trigger a breakout. If not, the $1.05 billion ETH wall holding longs stays exposed, keeping risk front and center for traders.
Source: Coinglass
However, any breakdown will be more than just a routine pullback.
Instead, Ethereum’s inability to capture liquidity will highlight that until institutional bids return, a breakout will remain unlikely. However, the bigger question will become – Why won’t the institutional bid come back?
If this persists, Ethereum’s “fundamentals-driven” narrative will come under growing scrutiny, with any breakdown revealing “hype,” rather than a genuine undervaluation opportunity, despite strong on-chain activity.
Final Thoughts
- Ethereum’s market faces a $1 billion+ liquidation wall as on-chain growth meets weak institutional demand.
- This setup is likely testing whether its fundamentals story holds or hype dominates.
