Rebeca Moen
Jan 08, 2026 07:20
Ethereum trades at $3,115 following yesterday’s blob capacity upgrade, setting stage for potential breakout above 0.04 ETH/BTC ratio that could trigger broader altcoin rally.
Ethereum’s Critical Test: Blob Upgrade Meets Key Technical Resistance
Ethereum’s freshly implemented blob capacity upgrade is colliding with a make-or-break technical setup that could determine whether the world’s second-largest cryptocurrency breaks free from Bitcoin’s shadow or continues its underperformance streak. Trading at $3,115.49 after a 4.42% daily decline, ETH sits precariously above crucial support levels while technical indicators flash mixed signals that have traders divided on the next move.
Yesterday’s Upgrade Changes the Game
The January 7 blob capacity enhancement represents more than a routine protocol update—it’s potentially reshaping Ethereum’s competitive position in the Layer 2 wars. By increasing blob capacity per block, the upgrade directly targets the Achilles’ heel of Ethereum’s scaling solutions: transaction costs on networks like Arbitrum, Optimism, and Base.
“This upgrade could be the catalyst that finally makes L2s competitive with alternative chains,” notes a senior analyst at Binance, where ETH spot volume reached $1.11 billion in the past 24 hours. The timing couldn’t be more critical, as Ethereum has been losing market share to faster, cheaper alternatives throughout 2025.
Market participants are watching the ETH/BTC ratio closely, currently sitting at 0.0346 after months of underperformance. Michael van de Poppe’s prediction that ETH/BTC could break through 0.04 in January has gained traction among altcoin traders, who view this level as the trigger for a broader ecosystem rally.
Technical Picture Points to Decision Time
The charts tell a story of a market caught between competing forces. Ethereum’s RSI sits neutrally at 53.05, neither oversold nor overbought, while the MACD histogram shows bullish momentum at 26.66. More telling is ETH’s position at 0.68 within its Bollinger Bands—elevated but not yet at resistance.
Key levels are clearly defined: immediate resistance looms at $3,308, with stronger resistance at $3,447 representing a level that hasn’t been meaningfully tested since the November selloff. Support appears solid at $2,888, backed by the 20-day simple moving average at $3,036.
The 200-day moving average at $3,619 remains a formidable obstacle, sitting roughly 16% above current levels. This gap represents the mountain ETH must climb to establish a convincing bullish trend, similar to the pattern seen during the 2023 recovery when Ethereum consolidated below its 200-day average for months before breaking higher.
However, one concerning signal emerges from the trading range data. ETH’s 24-hour high of $3,263 failed to hold, suggesting sellers remain active near technical resistance levels. The daily ATR of $117.85 indicates elevated volatility that could work both ways.
Bulls and Bears Make Their Cases
Optimists point to the ecosystem improvements and potential for reduced L2 fees to drive adoption. “The blob upgrade addresses real pain points that have pushed users to competitors,” argues one DeFi researcher who requested anonymity. “If transaction costs drop meaningfully on major L2s, we could see significant user migration back to Ethereum-based protocols.”
The bull case extends beyond technical improvements. With ETH trading well below its 52-week high of $4,832, the risk-reward setup appears favorable for buyers betting on a return to form.
Yet skeptics raise valid concerns about Ethereum’s competitive position. Despite numerous upgrades, ETH continues underperforming Bitcoin, suggesting institutional preference may have shifted toward the digital gold narrative. “The blob upgrade is nice, but it doesn’t address Ethereum’s fundamental challenge of being neither the fastest nor the cheapest option,” warns a crypto hedge fund manager.
The Trade Setup
For bulls, the setup requires patience and precise timing. Entry above $3,200 with a target of $3,450 offers a reasonable 2:1 risk-reward ratio, using $3,050 as a stop-loss level. More aggressive traders might wait for a decisive break above $3,308 before committing capital.
Bears should watch for failure to reclaim $3,200, which could trigger a test of $2,888 support. A break below this level would likely accelerate selling toward the $2,623 strong support zone.
The ETH/BTC ratio remains the wild card. A break above 0.037 could trigger algorithmic buying from altcoin momentum strategies, while a drop below 0.034 might signal extended underperformance.
What Happens Next
Ethereum faces a defining moment where technical analysis meets fundamental catalysts. The next 72 hours will likely determine whether the blob upgrade translates into sustainable momentum or becomes another “sell the news” event.
Key resistance at $3,308 represents the line in the sand—a convincing break above this level with volume would target $3,450 within two weeks. Failure to hold $3,100 support, however, opens the door to deeper weakness toward $2,888.
Image source: Shutterstock
Source: https://blockchain.news/news/20260108-prediction-eth-tests-3100-support-as-blob-upgrade
