Why do I still have confidence in ETH?

Author: Lucas

Compiled by: Jiahua, ChainCatcher

Ethereum is Dead

The sentiment towards Ethereum on crypto Twitter is at a historical low.

Many of my peers have given up on Ethereum over the years, with some even leaving the broader crypto industry. Most of them hardly hold any ETH anymore, largely because they believe it no longer has investment value. This is not directed at any individual or group, but rather a genuine observation among my contemporaries in the industry.

While the larger outflow of funds seems to stem from cryptocurrencies no longer being cutting-edge technology (with AI, robotics, and biotech taking their place), the pessimism surrounding ETH largely originates from its price performance over the past five years.

The experience of holding ETH has been terrible. No need to beat around the bush.

But I remain optimistic about Ethereum and ETH, in fact, more steadfast than ever. You should be too.

In fact, Ethereum is on the brink of its most exciting phase of growth and adoption. Let me explain.

About Price Performance

Let's start with an obvious question: over the past five years, ETH's price performance has been absolutely disastrous.

For those who have held since 2021, the best-case scenario is breaking even, while the worst-case scenario is significant losses. Even after the recent downturn, BTC is still above the historical high of the 2021 cycle and reached twice the previous peak during the 2025 peak.

In contrast, ETH is currently about 60% lower than the historical high of the last cycle and is barely set to reach a new high in 2025, not even breaking $5000.

Meanwhile, the S&P 500 index is hitting historical highs almost daily, and any hot concept favored by Wall Street (like AI, semiconductors, energy, etc.) is skyrocketing.

The good news is that if you extend the timeline, the chart actually looks like just a multi-year consolidation period. Ethereum still has a market cap of over $200 billion and has largely held the $2000 mark, firmly placing it among the top 100 assets globally.

The better news is that historically, high-growth assets often experience years of consolidation and volatility before embarking on epic surges.

Ignore the percentage fluctuations. What matters here is the time spent at this price range.

In fact, all of the largest companies in the world have gone through this phase.

The first example is Amazon ($AMZN). Bezos led the company through nearly a decade of consolidation throughout the 2000s, surviving the downturn after the dot-com bubble burst, ultimately becoming one of the most valuable companies in the world.

Wall Street darling Nvidia ($NVDA) also experienced a 7-year consolidation in the 2010s. Riding the wave of AI, it has now become one of the most valuable companies globally.

Apple ($AAPL) went through a similar struggle in the 80s and 90s, trying to find its footing until Steve Jobs returned to the company in 1997.

Finally, Microsoft ($MSFT) underwent about 15 years of consolidation before breaking through historical highs. If you bought MSFT in 2000, you didn't truly break even until 2015. It is now the second most valuable company in the world and one of the best-performing companies over the past five years.

I believe you understand. Almost all of the world's most valuable companies have gone through these extremely long and tedious consolidation periods (if lucky, they briefly retest historical highs before falling again), ultimately encountering catalysts that drive their next round of growth.

It is also worth noting that during these periods, the S&P 500 index frequently set historical highs, while the performance of the aforementioned assets lagged behind the market.

Therefore, in terms of ETH's price performance, the past five years are not uncommon when viewed through the lens of financial history.

The most reassuring aspect is that when you set aside price performance and examine its fundamentals, you will find that Ethereum's fundamentals have never been stronger.

About Network Activity

You might think that with the poor sentiment and price trends, Ethereum's network activity would also be sluggish.

Transaction volumes should be declining, fees would be so high that no one would want to use it, and there would be almost no adoption.

The reality, however, is quite the opposite.

Transaction volumes on Ethereum are surging. Fees are cheaper than ever. And the pace of tokenization is accelerating (which will be detailed below).

Data Source: Etherscan.

As of May 2026, Ethereum is averaging 2.27 million transactions per day. This is a historical high for the network. Meanwhile, the average fee during this period is only $0.27. This starkly contrasts with the $50 to $100 paid during the frenzy of 2021 (even though the current transaction volume is larger).

Additionally, the number of addresses continues to grow. The network has surpassed 400 million addresses and is growing at a steady rate of about 0.08% per day, with daily active "users" exceeding 1 million in recent months.

At this rate, assuming no major growth catalysts during this period, Ethereum will surpass 1 billion addresses sometime in mid-2029.

Finally, the amount of ETH staked on the network continues to reach new highs. Currently, over 32% of the supply is used to secure the network.

All of this indicates that Ethereum has achieved significant scalability while maintaining its security and decentralization.

Moreover, Ethereum has maintained 100% uptime throughout its existence of over a decade, giving the network an unfair advantage: it is the most trusted, neutral, secure, and programmable block space in the world.

This is a prerequisite for Ethereum to become the infrastructure of the global financial system.

Infrastructure of the Global Financial System

Since entering this field in 2017, my assertion about Ethereum has always been:

• All value will be tokenized
• Ethereum is the settlement layer for tokenized value
• ETH will capture the value generated by settlement layer activities.

In its first decade of existence, Ethereum has been the experimental ground for crypto-native tokenization (such as DeFi, NFTs, meme coins, etc.). This is a crucial foundational step, and while this experimentation will continue, the network is opening a new chapter that pushes itself to trillion-dollar levels.

For hardcore crypto natives and cypherpunks, this chapter may seem more "boring," but it undoubtedly plays an extremely valuable and important role in the world. This is something we should all support.

Ethereum will become the main stronghold for the $700 trillion worth of traditional assets destined to be tokenized.

Many readers may respond, "Ethereum can't scale to support this," or "other competitors will eat up market share."

But for these critics, the harsh reality is that early data shows the exact opposite result: the financial system is gravitating towards Ethereum.

A series of news headlines over the past two years. Note that they all have a common theme.

Today's financial institutions need certainty. Banks, asset management firms, and clearinghouses are deciding to trust blockchains to secure their valuable assets, which is a huge and significant decision.

They need to seize the massive opportunity at hand, but at the same time, they do not want to be fired.

This does not mean that projects like Hyperliquid and Solana cannot succeed or cannot grab a piece of the pie, as the cake is big enough. In fact, I firmly believe that the beneficiaries of this wave will not be just one.

However, in the process of institutions moving towards tokenization, Ethereum will be the preferred choice.

If you don't believe the headlines, don't worry. I have evidence.

Stablecoins are the first tokenized real-world assets to find product-market fit. Their circulation has exceeded $300 billion, and Tom Lee referred to it as the "ChatGPT" moment in the cryptocurrency space.

Where is the main stronghold of stablecoins?

Ethereum, which holds about 54% of the total market share.

It clearly depicts my expectations for the development of RWA tokenization: Ethereum will win, while many other networks will also gain their share.

Data so far supports this claim.

According to @RWA_xyz data as of June 1, 2026, the total value of real-world assets (RWA) is currently experiencing parabolic growth, exceeding about $30 billion.

Not surprisingly, over 53% of existing RWAs are located on Ethereum. Despite fierce competition among various Layer 1s, and any network having a chance to compete for the non-stablecoin RWA pie, Ethereum remains the dominant winner.

Today's RWAs remind me of DeFi in 2019/2020. A brand new and emerging field with a clear path to becoming the next "big trend," supported by early growth data.

This is a snippet from @DefiLlama showing the exponential growth of DeFi TVL in early 2020. If you look closely, this chart should look very familiar.

Coincidentally, when DeFi's TVL reached billions of dollars, it was precisely during the period when ETH was stagnant.

The summer of DeFi was in full swing, liquidity mining was all the rage, yet ETH was still recovering from the crash triggered by the COVID-19 pandemic, hovering between a valuation of $2 billion to $2.5 billion (only a tenth of today's valuation).

Meanwhile, the recently launched BNB Chain was threatening Ethereum's throne as a scalable and cheap alternative.

It wasn't until DeFi began to occupy a significant portion of the network (about 20% of the network's market cap in early 2021) that ETH began its epic rise, soaring from about $300 to around $4000 by the end of that year.

For background reference, the current value of all RWAs on Ethereum (excluding stablecoins) is $16 billion, which is about 7% of ETH's $230 billion market cap. We are now at the same crossroads, only with all numbers magnified by 10 times. Not $3 billion in DeFi, but $30 billion in RWA; ETH is no longer stagnant at $200 but is firmly seated at $2000.

Replacing BNB Chain is Hyperliquid (by the way, BNB's performance is still outstanding).

✍️ Note: It is undeniable that DeFi at that time generated more demand for ETH as collateral than today's RWA, coupled with NFTs enhancing the narrative of "ETH as currency."

On the other hand, Ethereum at that time did not have a proof-of-stake (PoS) mechanism, and EIP 1559 was only implemented towards the end of the cycle. Now both mechanisms are live, providing a clear path indicating that any activity on Ethereum will return value to ETH.

If this "10x expansion" assumption is accurate, it means that the total value of RWAs in this cycle could exceed $1 trillion (the peak of DeFi TVL was about $150 billion). This is still excluding stablecoins.

With the advancement of The Clarity Act, this assumption becomes even more plausible, as the act paves the way for the tokenization of everything and the on-chain migration of the financial system in the U.S. (and globally).

According to @Polymarket data, as of the time of writing, the probability of this act being signed into law by the end of the year is about 55%.

If it is signed into law in 2026 or later, it will be a significant catalyst for Ethereum and the entire crypto space.

Ethereum is Still Alive

All stocks, bonds, commodities, currencies, real estate, art, intellectual property, and anything of value will be tokenized.

This is the next great financial innovation of the world. The crypto industry is finally ready for it. For the first 20 years of its life, the industry has been focused on tokenizing unique and quirky crypto-native values (protocols, applications, etc.).

The next 20 years will be dedicated to bringing everything else in the world on-chain.

Despite the poor sentiment on crypto Twitter, I firmly believe that Ethereum will become the home for most of the tokenized value in the world.

Why? Because it has excelled in the areas it must rely on strength to win: security, reliability, and liquidity.

If Ethereum carries most of the world's value, the market will ultimately have to reprice ETH (just like in the past).

But I think I will save this analysis for the next discussion.

Thank you for reading. Hold on, ETH holders.