Ethereum Breakout After Fusaka, ETF Demand Surges!

Ethereum Holds Gains After Fusaka Upgrade and ETF Inflows

Ethereum posted notable price and volume moves this past week driven by two measurable catalysts: the Fusaka network upgrade and sizeable spot ETH ETF demand. Together these developments tightened available supply on exchanges and amplified buying pressure, producing a rapid run-up and elevated intraday volatility. The combination of lower Layer‑2 costs, institutional accumulation, and dwindling exchange inventories has created a clearer, data‑backed story for the recent breakout.

What Moved the Price: Concrete Drivers

Fusaka Upgrade — Lower Costs, Higher Throughput

The Fusaka upgrade, activated in early December, reduced transaction costs on Layer‑2 networks and improved overall throughput. Lower fees tend to revive on‑chain activity and make ETH more attractive for traders and builders, which in turn raises demand for base‑layer ETH used for fees and staking. After the upgrade, on‑chain metrics showed a spike in Layer‑2 activity that coincided with the first leg of the rally.

Spot ETF Inflows — Institutional Buying Pressure

Institutional flows into spot ETH trusts materially contributed to the recent upward price pressure. Notable inflows of approximately $140 million and $35.5 million on separate days in early December (with BlackRock’s vehicle among the leaders) tightened available derivative and spot liquidity. These inflows are concrete capital moving into passive exposure, which removes ETH from the tradable pool and supports higher prices.

Supply Compression: Less ETH on Exchanges

Exchange balances for ETH have dropped to multi‑year lows — a meaningful, non‑speculative data point. A smaller fraction of circulating ETH sitting on exchanges means fewer tokens are readily available for immediate selling. In the past week, on‑exchange supplies fell toward levels not seen in years, while staking and custody positions increased, creating structural scarcity that favors price resilience.

Price Action and Volatility

Market moves were sharp: ETH moved from roughly $2,860 into a brief high near $3,680 during early December, an intraperiod surge reflecting thin liquidity and concentrated buying. By mid‑December, softer macro prints pushed the price back toward the low‑$3,000s (around $2,938 on December 19), showing that while catalysts supported a rally, broader macro cues still steer risk appetite and volatility.

What Traders and Investors Should Note

• Real supply shifts matter: reduced exchange balances and growing staking custody remove immediate selling liquidity and can amplify rallies.
• Upgrades that lower costs (like Fusaka) can change user behavior quickly — expect renewed Layer‑2 activity to continue influencing short‑term flows.
• ETF flows are quantifiable capital — watch daily filings and net inflows for concrete directional signals rather than relying on sentiment alone.

In sum, recent price strength in ETH has been anchored by verifiable, on‑chain and capital‑flow events: the Fusaka upgrade improved utility, while spot ETF inflows and falling exchange balances reduced available supply. These are measurable drivers that explain the recent volatility and the shift toward bullish price action, even as macroeconomic data continues to modulate the pace and sustainability of gains.

Conclusion

Last week’s Ethereum moves were not purely speculative: protocol improvements, institutional inflows, and supply compression combined to produce a strong, observable impact on price and volume. Traders should monitor continued ETF activity, on‑chain exchange balances, and Layer‑2 usage metrics to assess whether the breakout consolidates or faces a retracement as macro data evolves.