Ethereum recorded its highest level of on-chain usage in late December 2025, with transaction volumes reaching a new all-time high even as ETH’s price remained stuck near the $3,000 level and far below previous cycle peaks. The rise in network activity has been fueled by increased Layer-2 settlement activity, a recovery in DeFi usage, and consistent stablecoin transfers, while improved network efficiency has kept transaction fees relatively stable compared to past cycles.

On-chain indicators suggest strengthening fundamentals beneath the surface. Large Ethereum holders continue to accumulate, and exchange reserves have declined significantly over the past year, signaling a reduction in readily available supply. At the same time, higher transaction activity implies increased ETH burning under the EIP-1559 mechanism, which could gradually tighten supply over the long term.

Despite these supportive signals, short-term market dynamics remain a headwind. Recent data shows sizable ETH inflows to major exchanges, often associated with selling pressure or defensive positioning, helping explain why price action has remained muted. As a result, Ethereum is caught in a divergence where record network demand contrasts with subdued market sentiment, leaving price direction dependent on liquidity conditions in the weeks ahead.