Ethereum’s value proposition is under scrutiny by investors as the network faces pressure. After the Bankless co-founder, David Hoffman, announced that he was selling his Ethereum holdings, the discussion got heated.
Popular investor and “ETH is money” advocate Hoffman pointed out that the market was overstimulated by that rally. He still believes in the technology of Ethereum, but doesn’t think there will be a significant revaluation of ETH as an asset. There were some recent on-chain signs that support portions of his argument.
The Bankless Founder’s Sold Ethereum Decision Leaves Lessons to Debate.
Over the last five years, Hoffman has been one of the more vocal supporters of Ethereum. This sale came as a surprise to many investors, causing significant discussion throughout the crypto sector.
Ethereum’s investment thesis was that all layers of the ecosystem performed better against rivals, Hoffman said. He thinks it didn’t happen as they hoped. He says that the protocol is still capturing value as a developer and applications, but less so through ETH itself.
The sale of Ethereum by David Hoffman has sparked a debate on the long-term investment thesis of ETH. [Courtesy: CryptoAdventure]
Bankless Founder Sold Ethereum As Active Addresses Declined
Ethereum’s network activity has decreased significantly since the start of the year. According to Santiment data, DAAs hit a peak higher than 1.5 million on a daily basis in January before declining significantly.
The metric is currently at about 544,000. This trend is consistent with Ethereum’s overall price downtrend, as ETH has dropped from the $3,400 highs in December to under $2,000 today.
The bearish story is supported by a number of indicators:
- The number of daily active addresses dropped from more than 1.5 million to a little under 544,000.
- There was a gradual shift towards Layer-2 ecosystems as users moved towards the activities.
- Activity on Ethereum’s base layer declined, resulting in fewer fees generated.
- The share of fees is still essential for L1 token pricing.
- Transaction volume is being shared by competing networks.
This shows that demand for the Ethereum base layer is still in decline.
What strategies are other networks using to compete with Ethereum?
When making his case, Hoffman mentioned a number of rival blockchain networks. He pointed out that Solana has been rerating in 2024, and NEAR has been doing well in 2026.
Layer-1 assets are more valuable when their fee generation dominates, Layer-2 when they don’t, Layer-3 when they do, and Layer-4 when they don’t,” said his analysis. That fee market share went on to slip away as well during 2024 and 2025, posing problems for the investment story of ETH.
He also mentioned BNB and TRX, two of the most lucrative blockchain networks, that are still in the top. They have done well, and he’s convinced that income is more important than technology in valuing a business.
Exchange Supply Growth Signals Returning Sellers
Another key indicator is exchange balances. This corresponds with a pullback in the amount of Ethereum on the exchange by about 8.5 million to approximately 7 million by the end of January.
That decrease was seen by many analysts as proof of accumulation. This trend continued until April, when it turned dramatically around in May.
Key developments include:
- The number of exchange balances went up from about 7 million to 7.5 million.
- Increasing balances are likely to be signs of preparation for sale.
- The flip was the result of a number of months accumulating.
- Growth was accompanied by a decline in network activity.
- ETH was also lower than the significant $2,140 support level.
The signals indicate some investors are getting ready for additional downside risk.
A series of rising ETH exchange balances could signal that investors are buying the dip once again. [Courtesy: CoinPedia]
What Does Stablecoin Growth Mean For ETH Holders?
Ethereum is still the leading settlement network for stablecoins. The value of the stablecoins now trading on the blockchain is around $163 billion.
This is up from just $3 billion in 2020. Even with this increase, Hoffman feels that the main gain is to the holders of the stablecoins, not to the ETH investors.
His argument is based on capturing value. The economic payoffs are increasingly going elsewhere while Ethereum supplies the infrastructure. Investors are consequently interested in, e.g., whether the price of rising utility can be met with increasing demand for ETH in the future.
Bankless Founder Sold Ethereum As ETH Tests Critical Support
Ethereum has recently broken through a number of significant technical levels, bringing its price to around $1,978. The asset is still in an ongoing trend of falling in a bear market, and its price action has been hampered by a bear market channel that has been in place since the end of April.
Rejected at the 0.382 Fibonacci retracement level at $2,382, before dropping below the 0.236 level, at $2,140. The next significant support level is now seen as being at $1,920.
There are a number of points to be considered:
- Support near $1,920.
- Downside target around $1,750.
- Resistance at $2,140.
- Fibonacci resistance near $2,382.
- RSI indicates oversold conditions.
The next transaction may well set the tone for the future of Ethereum over the next few months.
What Could Happen Next For Ethereum Price Prediction?
The amount of trading has been steadily falling since February. The trend has shown that neither the buyer nor the seller is very confident.
Ethereum’s 14-period RSI is at the 30 level, on the verge of oversold. Previous similar readings have historically led to short-term relief rallies.
But in many cases, previous rebounds were in the context of larger downtrends. If the daily chart closes above $2,140, it would turn the sentiment and provide a challenge to the bearish view. Meanwhile, the market is still in favour of sellers.
Conclusion
As a result of his recent sale of Ethereum, the valuation of ETH has sparked a lot of discussion regarding its future. This sale by David Hoffman has been bringing a lot of conversation about the valuation of ETH in the future. A cautious outlook is backed by falling active addresses, price action, and increasing exchange balances.
All of these are indicators, but do not guarantee further losses. Combined, however, they make an adverse situation for bulls. The next few weeks will be crucial for ETH to break out of the $2,140 resistance and hold the $1,920 support.
Also Read: Crypto News Today: AlphaPepe Presale Surges Past $1.4M as Ethereum Targets $10K
FAQs
Q1: What was the reason behind selling the Ethereum?
A1: The “ETH is money” thesis was over, David Hoffman said. He thinks that Ethereum generates value, but doesn’t get the full value directly in ETH.
Q2: What is the number of active Ethereum addresses registered?
A2: Santiment data indicates that the number of addresses has dropped from more than 1.5 million in January to approximately 544,000.
A3: What will be the next major support level of Ethereum?
A3: The next significant support level is $1,920, according to analysts. If it breaks below, then ETH could be headed back down to $1,750.
Q4: What is the value of stablecoins on Ethereum?
A4: Ethereum is currently handling around $163 Billion of stablecoins. The figure has increased significantly from $3 billion in 2020.
Disclaimer:
This article is designed to provide information only and is not intended to be financial, investment, or trading advice. The cryptocurrency market is still highly volatile and has a lot of risks. Any views or information expressed herein, including those of David Hoffman, are not recommendations to purchase or sell a digital asset. It is advisable for readers to make investment decisions with a good deal of research and to seek the advice of professional financial advisors.
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