Why is Ethereum Rising? An In-Depth Analysis of the Five Major Growth Drivers and Market Outlook for 2026

After experiencing recent price fluctuations, according to Gate market data, as of February 4, 2026, Ethereum (ETH) is priced at $2,273.75, with a market capitalization of approximately $353.69 billion. Although short-term market sentiment remains neutral, multiple authoritative institutions point out that a convergence of technical, fundamental, and macroeconomic factors may be paving the way for Ethereum’s next rally.

Institutional Adoption and Revaluation

Ethereum is undergoing a profound transformation, evolving from a “technology experiment” into a “global financial infrastructure.” The core driver of this shift is substantial adoption by traditional financial institutions.

Major financial giants like JPMorgan, Fidelity, and BlackRock have directly deployed products such as money market funds and private credit funds on the Ethereum mainnet or its Layer 2 networks, integrating asset management processes into blockchain systems. This institutional-level adoption creates a new type of demand, different from speculative buying in the past. Wall Street strategist Tom Lee compares corporate treasuries holding Ethereum (such as BitMine Immersion Technologies) to a “micro-strategy” within the Ethereum ecosystem; these entities continuously accumulate ETH and view it as a profitable and practical “digital oil.”

With the passage of the “GENIUS Act” (Stablecoin Act) in the United States, which provides a clear regulatory framework for stablecoins and their underlying public blockchain infrastructure, legal barriers to institutional adoption have been further cleared.

Technical Upgrades and Network Efficiency

Ethereum’s ongoing technological evolution is the engineering foundation supporting its long-term value. The network is implementing a series of upgrades aimed at enhancing scalability and efficiency. Standard Chartered analyst Geoff Kendrick notes that plans to increase Ethereum’s Layer 1 throughput tenfold over the next two to three years “seem to be working,” with recent upgrades successfully boosting network capacity.

Higher throughput directly correlates with higher market cap. Meanwhile, the maturity and adoption of Layer 2 solutions (such as Arbitrum, Optimism, Base, etc.) are effectively alleviating mainnet pressure, reducing user transaction costs, and opening up possibilities for enterprises to build dedicated, compliant blockchains. Layer 2 is not only an expansion tool but also a hub for innovative business models. For example, Coinbase’s Base chain leverages Ethereum’s security and liquidity while opening new revenue streams.

On-Chain Activity and Fundamentals

Despite price volatility, on-chain usage data for the Ethereum network shows strong vitality, creating a “divergence” from the current price. A Goldman Sachs report in early February 2026 revealed key data: the daily active addresses, new addresses, and transaction counts on the Ethereum network increased by +27.5%, +26.8%, and +36% respectively in January. Notably, daily new addresses hit a record high, with an average of 427,000 new addresses per day in January. This indicates that the network’s growth in health and breadth is surpassing that of the previous bull cycle.

Additionally, Ethereum continues to dominate in three key areas: decentralized finance (DeFi), stablecoins, and tokenization of real-world assets (RWA). Over 60% of stablecoins and the majority of high-value assets are tokenized on Ethereum and its Layer 2 ecosystems.

Macroeconomics and Capital Rotation

Changes in the macro environment could serve as external catalysts for capital rotation into crypto assets, especially Ethereum. Tom Lee of Fundstrat proposes a “risk appetite rotation” thesis. He suggests that recent consolidations in precious metals (such as gold and silver) near all-time highs may prompt funds to exit these traditional safe-haven assets and reallocate into digital assets. In this rotation, Ethereum’s yield opportunities (staking, DeFi) and growth narratives (tokenization) may be viewed as higher-risk but with greater growth potential compared to Bitcoin, attracting capital seeking excess returns.

If the potential “CLARITY Act” in the U.S. passes in Q1 2026, providing clearer regulation for digital assets and DeFi, it could serve as a positive macro event that propels the market, especially for the regulation-sensitive Ethereum ecosystem.

Regulatory Environment and Long-Term Narrative

Long-standing regulatory uncertainty has been a major obstacle to full institutional adoption of blockchain. This situation is expected to change significantly in 2025-2026.

The U.S. passing the “GENIUS Act” to establish federal regulation for stablecoins, along with the potential enactment of the “CLARITY Act,” forms a regulatory foundation supporting responsible innovation.

SEC Chairman Gary Gensler even predicts that within the next two years, all major U.S. markets could be “on-chain.” This shift from “regulatory resistance” to “regulatory support” provides unprecedented policy certainty for Ethereum’s long-term narrative of transforming from a “geek’s paradise” to a “global settlement layer,” greatly boosting confidence among long-term investors.

Gate Market Data and Price Outlook

Based on the latest market data from the Gate platform as of February 4, 2026, we can conduct a neutral analysis of the current market and future prospects. Ethereum’s current price is $2,273.75, with a market cap of $353.69 billion, accounting for approximately 11.30% of the entire cryptocurrency market. The 24-hour price change is -3.14%, indicating some short-term market pressure. Historically, the current price remains significantly below the all-time high of approximately $4,946.05.

Regarding future price trajectories, market analysis offers multiple perspectives. Some models predict that Ethereum’s average price in 2026 could be around $2,926.98, with a volatility range estimated between $1,990.34 and $3,834.34. Looking further ahead, some analyses project that by 2030-2031, prices could reach higher ranges, such as $5,000 to $8,000 or more, depending on how the aforementioned multiple drivers develop over the coming years.

While crypto analyst Ben Cowen cautiously believes that reaching a new all-time high in 2026 is unlikely, another Wall Street analyst from Standard Chartered has set a long-term target of $40,000 for 2030. This vast divergence in forecasts highlights that the market is currently in a critical value discovery window. Regardless of short-term price fluctuations, the steady growth of over 400,000 new addresses daily on the Ethereum network quietly sketches an irreversible trajectory toward becoming a global digital financial infrastructure.