The market's confidence in Ethereum seems to be shaken. Combined with the hidden costs of the Layer2 war and the siphon effect of the Solana Meme economy, the future of Ethereum seems to be becoming increasingly unclear amid many controversies.
Ethereum, the "eternal runner-up", seems out of place in this round of bull market. Compared with the strength of Bitcoin, SOL and other currencies, ETH has been hovering around $3,000. In addition, the frequent selling of coins by the Ethereum Foundation has caused strong dissatisfaction in the community. The market's confidence in Ethereum seems to be shaken. Combined with the hidden costs of the Layer2 war and the siphon effect of the Solana Meme economy, the future of Ethereum seems to be becoming increasingly unclear amid many controversies.
EF frequently sells coins to "lose goodwill"
The Ethereum Foundation (EF) has been selling ETH on and off, and recently sold another 100 ETH, worth about $307,893. Data from blockchain analysis company SpotOnChain shows that this is the third ETH sale by the foundation in 2025.
![Ethereum Dilemma: Meme War, Layer2 Backlash and Value Revaluation Life and Death Line](https://cdn-img.panewslab.com/yijian/2025/1/29/images/a1ca8b2d41a615b7fe4acc7b3603cb05.jpeg)
In January this year, EF sold a total of 300 ETH (as of January 27), worth about $981,200. Market observers pointed out that the foundation's selling behavior has put pressure on the price of Ethereum. As of press time, ETH is trading at just over $3,000, down more than 7% in 30 days.
![Ethereum dilemma: Meme war, Layer2 backlash and value reassessment life and death line](https://cdn-img.panewslab.com/yijian/2025/1/29/images/9f551e6b663abdc4cc9935ac3a203f22.jpeg)
However, the Ethereum Foundation still holds a large amount of ETH reserves. According to Arkham Intelligence data, the foundation owns 269,175 ETH, worth approximately $817 million.
At the same time, Ethereum's on-chain activities also lag significantly behind other competing chains.
According to DappRadar data, Ethereum's on-chain transaction volume fell 38% to $36.5 billion over a seven-day period.
![Ethereum Dilemma: Meme War, Layer2 Backlash and Value Reassessment Life and Death Line](https://cdn-img.panewslab.com/yijian/2025/1/29/images/79fa4628ab99a05c9c981cdbb6d608dc.jpeg)
In contrast, activity on BNB Chain surged 112%, while Solana grew 36%.
According to DefiLlama, Ethereum generated only $46 million in fees between January 14 and January 21. In contrast, Solana collected $71 million in fees, and if the contributions of Raydium, Jito, and Meteora are included, its total for the same period reached $309 million.
Ethereum L2 is criticized as a "band-aid": "split" behind the prosperity
As ETH's performance slumps, the Ethereum Foundation is facing severe challenges, and calls for innovation and internal restructuring are growing. The rise of rival blockchains such as Solana has intensified the need for Ethereum to enhance its own strength and innovate within the ecosystem to maintain its competitive advantage.
The emergence of Layer 2 solutions such as Optimism and Arbitrum has alleviated the congestion and high gas fee problems of the Ethereum mainnet. However, the competition between these Layer 2s is becoming increasingly fierce, and the problem of ecosystem fragmentation has also become prominent.
Michael Egorov, founder of decentralized exchange Curve Finance, criticized in a report that L2 "is more like a Band-Aid... and a temporary solution than a foundation for building a sustainable strategy." He emphasized that the Rollup roadmap hinders composability and "leaks" most of ETH's value to L2 tokens and their operating companies.
Justin Drake of the Ethereum Foundation called in a post shared on X last weekend: "Enable native Rollup technology and end the era of Layer2 separatism."
Encrypted research and investment company Paradigm also called for reform. The company believes that Ethereum's current annual upgrade plan limits its ability to innovate and effectively respond to market trends. Paradigm said: "Accelerating the development of Ethereum will enable more people to enjoy the convenience of permissionless innovation and help pave the way to a truly global, trust-minimized financial system."
Faced with increasing pressure, the Ethereum Foundation announced plans to allocate 50,000 ETH (about $165 million) to support its decentralized financial ecosystem.
Ethereum co-founder Vitalik Buterin said the foundation is indeed making "significant adjustments" to its leadership to increase transparency and better support developers.
Technical analysis: key support and market sentiment game
If you look at the sword on the boat, February and March have always been bullish for ETH.
Coinglass data shows that ETH has been on an upward trend in February for the past six consecutive years, with the largest increase occurring in 2024, when it rose from $2,280 to $3,380 at the end of the month, an increase of more than 46%. March is also historically a favorable period for ETH. In the past nine years, it rose in March in seven years and in April in six years.
![Ethereum Dilemma: Meme War, Layer2 Backlash and Value Reassessment Life and Death Line](https://cdn-img.panewslab.com/yijian/2025/1/29/images/8c934ff7a851dea19fa09a86daa3f41c.png)
Engineer and analyst Wolf wrote on X on January 26: "With eight years of analyst experience, I can confidently say that I have never seen such a strong chart as ETH. The potential here is unparalleled. This is the best asymmetric bet you can make." Technical analyst Rakesh believes that ETH/USDT may fall to $2,850, which may become a strong support level. If the price rebounds from $2,850 but turns down from the 20-day EMA ($3,308), it will suggest that the bears are selling on rallies. This increases the risk of a break below $2,850. If this happens, the trading pair could fall to $2,400.
![Ethereum Dilemma: Meme War, Layer2 Backlash and Value Reassessment Life and Death Line](https://cdn-img.panewslab.com/yijian/2025/1/29/images/25ade0e15e376518eed27612be918679.jpeg)
The bulls don't have much time left, if they want to stop the decline, they must push the price back above the 50-day moving average ($3,455), then ETH/USDT may continue to rebound to $3,745.
In summary, when Solana uses Meme coins to reconstruct the traffic entrance, Layer2 becomes a value-pumping machine, and Ethereum's moat seems to be seriously eroded. Technological advantages must be transformed into ecological dominance. The loss of each price support level may trigger a collapse of faith. Where will Ethereum go? Time will tell us the answer.