TLDR
- Ether experienced a 21% decrease in the first quarter of 2026, marking its third-worst Q1 performance historically, despite robust network activity.
- Fundstrat’s Tom Lee attributes the price drop to a lack of market leverage and capital reallocation towards precious metals like gold and silver.
- Ethereum’s daily transactions reached a record 2.8 million on January 15, with daily active addresses exceeding 1 million in 2026.
- BitMine acquired 41,788 ETH last week, bringing its total holdings to 4.28 million ETH (3.55% of the total supply), though it faces $7 billion in unrealized losses.
- ETH declined to $2,200 on Monday following the announcement of Kevin Warsh as a potential Fed Chair candidate, leading to the second-largest single-day liquidation event for futures traders on record.
Ether has seen a 21% decline in the first quarter of 2026, representing its third-worst performance for the period in its history. The price fell from approximately $3,000 to a low of $2,200 on Monday before showing signs of recovery.
Tom Lee, head of research at Fundstrat, stated that the price decline is not consistent with activity on the Ethereum network. Data from Glassnode indicates that daily transactions reached an all-time high of 2.8 million on January 15, and active addresses in 2026 averaged around 1 million per day.
Lee highlighted that this trend differs from previous crypto bear markets, where both transaction volume and active user counts significantly decreased, as seen in 2018 and 2022. He commented, “Non-fundamental factors are arguably more the factors explaining the weakness in ETH prices.”
According to Lee, two primary factors are contributing to Ether’s subdued price: a lack of leverage in the crypto market since the October 10 crash, and a shift in investor capital towards gold and silver due to rising precious metal prices.
BitMine Continues Buying Despite Losses
BitMine, Tom Lee’s Ethereum treasury firm, purchased an additional 41,788 ETH last week. The company’s current holdings amount to 4.28 million ETH, representing 3.55% of the total supply. BitMine has staked approximately 2.87 million ETH and aims to increase its Ether holdings to 5% of the total supply.
JUST IN: Tom Lee’s ‘BitMine’ buys 41,788 worth $97 million.
— Watcher.Guru (@WatcherGuru)
“BitMine has been steadily buying Ethereum, as we view this pullback as attractive, given the strengthening fundamentals,” Lee stated. The firm is currently facing nearly $7 billion in unrealized losses due to the drop in Ether prices.
The most significant price drop occurred within the past week, with ETH falling over 25% after President Donald Trump nominated Kevin Warsh to succeed Jerome Powell as Federal Reserve Chairman when his term concludes in May.
Trading Volume Reaches Extreme Levels
Trading volumes surged to $55 billion, equivalent to 20% of ETH’s circulating market capitalization. Such figures are typically associated with smaller altcoins and meme coins rather than major cryptocurrencies like ETH.
In my opinion, will get a decent bounce from here.
NFA.
— Lucky (@LLuciano_BTC)
The sell-off led to substantial liquidations in the futures market. On January 30, Ethereum experienced $1 billion in long positions being liquidated in a single day, marking the second-highest daily liquidation on record, surpassed only by the October 10 flash crash.
The Fear and Greed Index reached 15, indicating “Extreme Fear” for the fourth time in the last 12 months, reflecting overall market sentiment.
ETH has rebounded from a critical support level at $2,200, the same price point from which it surged to a new all-time high after June 2025. The Relative Strength Index (RSI) has hit its lowest oversold reading since August 2024. Historically, when ETH reached similar oversold levels at $2,150 in August 2024, it subsequently rallied to $4,000 within a few months.
