And here's why:
1) Network activity
During a bull market, network activity goes up.
During a bear market, network activity goes down.
In the past 3 months, the crypto market has been in a downtrend, but Ethereum network activity is exploding.
Daily active addresses are at a new ATH.
Daily transaction count is at a new ATH.
Stablecoin supply is almost at a new ATH.
Staked ETH is at a new ATH.
And ETH gas fees have reached the Q2 2020 level.
This is a sign that Ethereum is scaling, and $ETH will benefit from it.
2) Institutional adoption
Despite prices being down 35% from ATH, institutions are more bullish than ever on ETH.
Treasury companies like BitMine are accumulating.
ETH ETFs just had their biggest weekly inflow since the October 10th crash.
JP Morgan launched its first tokenized money-market fund on Ethereum.
This is a sign that big money finds value in Ethereum, and they are going all-in.
3) Clarity Act Approval
Even though the recent voting was cancelled, I think the Clarity Act will be approved this year.
And it'll be more bullish for ETH than BTC.
This is because BTC already has the regulatory clarity, but alts don't have it.
With Clarity Act approval, the adoption of DeFi, AI, and stablecoins will increase, and Ethereum is the dominant leader in all of them.
More usage means more network activity, and ETH will benefit from this.
4) Fed Rate Cuts
I think we all could agree that Fed rates will further come down in 2026.
Low interest rates mean T-bills won't be a very lucrative investment.
And this is where ETH will benefit.
With a 2.5%-3% staking yield and a good token upside, institutions will rotate their capital into ETH.
I'm not talking about trillions here, but even a $5B-$10B capital allocation will be bullish for ETH.
5) Russell 2000 ATH
For weeks now, the Russell 2000 Index has been hitting new highs.
Historically, ETH has always followed it because Russell 2000 represents high risk-on stocks.
When they pump, it's a sign that capital is chasing risk, and it eventually moves into ETH.
Also, with the Fed already doing T-bill buying and a new pro-liquidity Fed chair expected by Q2 2026, the rally in risk-on assets could continue for longer.
Conclusion
Unlike BTC, ETH didn't have a major rally this cycle.
BTC almost pulled a 2x from its 2021 ATH, while ETH went barely above its 2021 highs.
This makes me wonder whether ETH could have a bullish 2026 given strong fundamentals and a catch-up trade.
(NFA)
