Why is the price falling despite Ethereum's fundamentals reaching new highs? The answer lies in the fundamentals in 2026.

2025 is the “Year of Contradictions” for Ethereum. On one hand, the mainnet transaction volume hits a record high, the total RWA value surges by 212%, and the DeFi market share remains above 50%. On the other hand, the annual return rate suffers an approximately 11% loss, and institutional funds continue to flow out. Behind this paradox, it reflects a profound cognitive shift in the crypto market: in the later stages of the cycle, fundamentals are more decisive than short-term price fluctuations in determining the true value of assets.

Strong Fundamentals, Why Is the Price Falling Behind?

According to the latest news, Ethereum’s fundamentals in 2025 are indeed impressive.

What do these data indicate? Ethereum’s position as the core infrastructure for smart contracts and financial applications remains solid. But the reality is, ETH is currently priced at $3,143.45, up 6.93% over the past 7 days, yet for the year, it still underperforms expectations.

Why does this divergence occur? Quick reports point out that the key reason is the rapid expansion of Layer-2 networks. This should be a good thing, but it brings a hidden cost: as more transactions flow to L2, the gas fees on the Ethereum mainnet continue to decline. Data shows that L2-related revenue has decreased by 53% YoY, causing Ethereum to lose nearly $100 million in income.

The Dilemma of a Double-Edged Sword

This involves a deeper contradiction. The expansion of Layer-2 indeed improves network throughput and user experience, but simultaneously compresses the mainnet’s fee revenue. Market concerns are: if transaction fees keep shrinking, can Ethereum’s ambitious roadmap still be fully supported?

This question has led to a divergence among investors:

• Short-term speculators are disappointed with an 11% loss in 2025 and are choosing to wait or exit
• Long-term holders see the real value in the fundamentals and continue to accumulate

An interesting signal is that ETH’s exchange reserves decreased by about 20% by the end of 2025, to 16.6 million tokens. This suggests investors are more inclined to hold long-term rather than trade frequently. In other words, the market is shifting from price speculation to value assessment.

Changing Market Signals

From related information, this cognitive shift is already evident:

• Ethereum spot ETFs continue to attract funds, with net inflows of $174 million yesterday, and a total net inflow of $12.502 billion historically
• Founder Vitalik Buterin emphasizes the importance of “decentralization” and real-world applications, making it a core focus for 2026
• In contrast, Bitcoin spot ETFs have seen net outflows of $4.57 billion over the past two months, reflecting a selective flow of funds

These signals indicate that institutions and long-term investors are re-evaluating Ethereum’s value. They are less focused on short-term price movements and more on network usage, ecosystem depth, and institutional participation.

2026: Fundamentals as the Pricing Anchor

Looking ahead to 2026, as decentralization advances further and real-world applications continue to expand, Ethereum’s fundamentals may become more relevant than ETH’s price itself. Short-term volatility may still exist, but the long-term value will be anchored by factors such as:

• Sustainability of network activity and transaction volume
• Progress in real-world applications like RWA and DeFi
• Deepening institutional involvement (e.g., JPMorgan’s asset tokenization)
• Solutions to balance revenue between L2 and the mainnet

My personal view is that 2026 could be the year when Ethereum’s “fundamental value is re-priced.” Not necessarily meaning a big price surge, but the focus of investors will shift from “Will the price go up?” to “Is the network truly being used?” This cognitive shift itself is the biggest variable.

Summary

Ethereum’s fundamentals in 2025 are indeed solid, but its price performance leaves much to be desired. This reflects an important market cognitive adjustment. In the short term, price fluctuations will likely continue; but in the long term, signals such as strong fundamentals, declining exchange reserves, and ongoing institutional participation point in the same direction: the market is transitioning from speculation to value assessment. In 2026, what truly determines Ethereum’s value will no longer be short-term price swings, but the depth of network usage and ecosystem development. For long-term holders, this may be a clearer standard for judgment.