Can the Fusaka Upgrade Revive Ethereum’s Price Momentum After Recent Decline?

Ethereum has experienced a significant price drop, falling below $3,000. As the Fusaka upgrade approaches, it aims to improve scalability and lower transaction costs. This article examines the recent price movements, the implications of the Fusaka upgrade, and how it may influence Ethereum's future.

Key Takeaways

Ethereum's price dropped over 2%, falling below $3,000, resulting in around $500 million of long positions being liquidated.
The Fusaka upgrade, set to go live on December 3, aims to enhance scalability and lower fees on the Ethereum network.
Industry interest in Ethereum is growing, with major players investing in tokenized products.
Current price indicators suggest that Ethereum may continue to experience bearish trends, with critical support levels at $2,700 and $2,500.

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Ethereum's Recent Price Movements

Ethereum’s price has recently declined by more than 2%, slipping beneath the $3,000 mark after breaking below the critical $2,900 support level. This downturn resulted in extensive liquidations, with approximately $500 million in long positions wiped out. Intriguingly, data indicates that $79 million of the total $106 million in ETH-centered contracts liquidated were long positions.

During this drop, trading activity surged noticeably, with daily trading volume increasing by 200% to reach $33.2 billion. The overall cryptocurrency market also faced a contraction, decreasing nearly 1.2%, which translated to an estimated loss of $110 billion in value in just a few hours. Other prominent cryptocurrencies, including Bitcoin, SOL, XRP, and DOGE, followed a similar downward trajectory.

Despite the volatility that has shaken the market, some firms took the opportunity to accumulate ETH during the dip. Notably, BitMine Immersion Technologies increased its holdings by 96,798 ETH, setting itself apart from other companies that are opting to reduce risk exposure.

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The Fusaka Upgrade: Enhancing Ethereum’s Scalability

On December 3, Ethereum is poised to activate its Fusaka upgrade, marking the network’s second significant update of 2025. This update is focused on aligning changes within the execution layer and the consensus layer, with features designed to enhance Layer 2 scalability and cut costs.

A crucial element of this upgrade is PeerDAS, a data-sampling mechanism intended to minimize the bandwidth that validators need to verify data on Layer 2. This innovation could reduce validator bandwidth needs by as much as 85% while significantly increasing blob data capacity. As a result, Layer 2 transaction fees may decrease by approximately 40% to 60%.

Additionally, the Fusaka upgrade will raise Ethereum’s block gas limit to 60 million, allowing for more transactions to be processed within each block. It will also implement enhancements to the Ethereum Virtual Machine, aimed at optimizing the execution of smart contracts. Together, these changes are expected to significantly boost the network’s transaction processing capabilities.

There has been a notable rise in industry interest in Ethereum leading up to this upgrade. Noteworthy financial institutions, including Amundi and Fidelity, have recently announced plans to engage with tokenized products built on the Ethereum platform, reflecting a broader trend of institutional involvement in the network.

As of the latest data, Ethereum (ETH) is trading around $2,807, with technical analysis suggesting that bearish momentum may persist. The Moving Average Convergence Divergence (MACD) remains in negative territory, and the Relative Strength Index (RSI) is currently at 32, indicating oversold conditions.

Key support levels have been established at $2,700 and $2,500. Should these levels fail to hold, the downtrend could intensify. Conversely, a rebound could see ETH climbing back toward the $2,900–$3,000 range. Following the recent decline, Open Interest has risen by 4.3%, suggesting that traders are reopening positions and bracing for heightened volatility.

It remains uncertain whether the Fusaka upgrade will successfully shift market sentiment. However, its potential long-term scaling impact could be significant in shaping Ethereum's recovery trajectory.

Cover image from ChatGPT, ETHUSD chart from Tradingview.