The current cryptocurrency market is undergoing a dramatic structural realignment. Examining the latest trading data, Ethereum (ETH) is experiencing a deep correction driven by both capital flows and shifting expectations. As of press time, ETH/USDT has fallen to approximately $1,847.84, with a clearly defined downward trajectory in recent sessions.
Looking back at the price action in February 2026, ETH plummeted from above $2,360 to the $1,825 range in a matter of days—a decline of more than 22.7%. Beneath this price collapse lies a comprehensive restructuring of the Ethereum network, encompassing technological upgrades, organizational shifts, and an evolving compliance environment. For institutional investors and financial professionals, understanding the transformation in Ethereum’s underlying asset logic, beyond short-term price fluctuations, represents the core analytical challenge.
The most immediate pressure Ethereum faces stems from a sustained withdrawal of liquidity. This capital exodus is not an isolated event but rather the convergence of multiple selling forces.
Spot ETFs experience net redemptions, signaling a marked increase in risk aversion among institutional investors. On January 29, 2026, US spot Ethereum ETFs recorded a massive single-day net outflow of $155.7 million. Breaking down the flows: Fidelity’s FETH saw a net outflow of $59.2 million, BlackRock’s ETHA recorded $54.9 million in outflows, and two Grayscale funds also registered tens of millions in redemptions. This pattern suggests that traditional Wall Street capital is systematically reducing its exposure to Ethereum.
Early whale sell-offs: On-chain data reveals that whale accounts offloaded approximately 1.43 million ETH in just a two-week period, adding significant selling pressure to already fragile markets.
Founder cash-out: This month, Ethereum co-founder Vitalik Buterin sold over 8,800 ETH, realizing approximately $18.45 million. In traditional financial markets, such concentrated selling by core management is typically interpreted as a major negative signal, further amplifying market anxiety.
Confronting this harsh market environment, the Ethereum Foundation (EF) has adopted a defensive posture in its financial strategy. Vitalik Buterin announced that the foundation will enter a five-year “moderate austerity” phase—a significant shift in how one of crypto’s most influential organizations manages its treasury.
From a corporate finance perspective, this represents a classic cash flow management strategy. The core objectives are twofold: first, to ensure the foundation can sustainably fund the development of Ethereum’s core underlying technology, avoiding threats to its independence that could arise from excessive resource consumption; second, to guarantee that Ethereum’s ambitious roadmap as a high-performance “world computer” stays on schedule.
To align with this strategy, Vitalik personally took steps to reduce certain “special projects” reliance on foundation funding. Instead, he chose to withdraw 16,384 ETH and utilize decentralized staking rewards to personally fund research and development of open-source software, hardware, and privacy-focused initiatives with public goods characteristics. This practice of internalizing peripheral R&D expenditures while concentrating on core business signals that capital operations within the Ethereum ecosystem are maturing and becoming more disciplined.
Technical Resilience Amid Price Weakness
While prices remain under pressure, Ethereum’s technical fundamentals have displayed remarkable resilience, even exhibiting a rare phenomenon of “price-volume divergence.” Recently, the Ethereum network’s TPS (transactions per second) hit a record high of 75,862, far exceeding the previous peak of 58,786.
This surge is primarily attributable to the Fusaka upgrade deployed last December. The upgrade introduced the PeerDAS mechanism, significantly increasing the data throughput capacity of the Layer 2 network. However, with this explosion in data volume, new systemic risks have emerged. Vitalik points out that the network faces serious centralization risks because current block builders still need to download complete data sets—a bottleneck that could undermine decentralization.
The Glamsterdam Upgrade: Rebuilding from Within
To address this potential threat, Ethereum plans to launch the Glamsterdam upgrade in 2026—a fundamental reform aimed at addressing oligopolistic dynamics within the network.
The ePBS mechanism reshapes value distribution: The core of this upgrade is ePBS (execution proposer-builder separation within the protocol). It forces the block building process to be incorporated into the underlying protocol, weakening the absolute dominance currently held by a few external builders by standardizing the bidding process.
Preventing rent-seeking by dominant players: For financial professionals, this means Ethereum is actively intervening in its internal MEV (Maximum Extractable Value) market structure, breaking down the technological barriers that favor well-capitalized players and reconstructing the underlying logic of staking rewards.
The Regulatory Sword: MiCA Looms
In addition to internal growing pains, the Ethereum ecosystem faces the imminent threat of regulatory intervention. The EU’s Markets in Crypto-Assets (MiCA) regulation, which comes into full effect on July 1, 2026, requires all crypto companies operating within the EU to meet stringent compliance standards.
The implementation of this legislation will directly impact the vast DeFi protocols, liquidity providers, and related derivatives markets built on Ethereum that lack traditional corporate entity backing. The sharp rise in compliance costs and the early withdrawal of non-compliant capital are underlying macroeconomic factors driving the recent sustained bleeding in the spot market.
The Divergence Thesis: Short-Term Pain, Long-Term Gain?
Ethereum currently exists in a state of divergence: on one hand, relentless selling by short-term capital and the forward-pricing of stringent regulation; on the other, robust expansion of its technological infrastructure and a self-revolution against internal monopolies. This is a classic “deleveraging” process—trading short-term pain for long-term systemic stability.
For investors capable of looking beyond immediate price action, the question is whether Ethereum’s foundational improvements will eventually outweigh the selling pressure. The answer may determine not just ETH’s price trajectory, but the future shape of the entire smart contract platform landscape.
Sources: Market data / On-chain analysis / Ethereum Foundation announcements / Author Max.s
