Why Ethereum’s Fundamentals May Be More Important Than ETH Prices in 2026

As we head into 2026, Ethereum's fundamentals might hold greater significance than price fluctuations. With 2025 showcasing a notable disconnection between price and underlying performance, Ethereum’s founder, Vitalik Buterin, is emphasizing the importance of decentralization and practical applications. This article examines Ethereum's operational milestones, revenue challenges, and the ongoing debate over its long-term value.

Key Takeaways

Ethereum had a robust operational year in 2025, marked by high transaction volumes and significant network upgrades.
However, revenue dropped by nearly $100 million due to falling gas fees, raising questions about the sustainability of Ethereum's growth.
There is a divide among investors regarding the emphasis on fundamentals versus short-term price speculation.
A focus on decentralization and increased application development may support Ethereum's long-term value, even amidst price volatility.

Why Ethereum’s fundamentals matter more than price in 2026

Understanding Ethereum's Progress and Challenges

Layer-1 networks are actively shaping their plans for 2026. In 2025, there was a clear divide between price movements and fundamental developments, prompting developers to reevaluate their strategies. The recent volatility has reinforced a vital lesson: in the long term, fundamentals are more crucial than mere speculation.

Building on this momentum, Vitalik Buterin, the founder of the Ethereum [ETH] network, welcomed 2026 with a renewed emphasis on Ethereum’s “decentralization” and a stronger focus on real-world applications.

Source: Growthpiechart (Ethereum revenue)

Did the Strategy Work in 2025?

The key question that arises is whether this focus on fundamentals actually paid off in 2025. In terms of operational performance, Ethereum had its best year to date. There were record transaction volumes, significant network upgrades, a sustained market share of over 50% in DeFi, and a remarkable 212% increase in the total value of real-world asset (RWA) transactions.

However, this growth did come with some downsides. Data from Growthpie indicates that Layer 2 networks experienced a 53% drop in earnings, impacting Ethereum’s revenue model and resulting in a nearly $100 million loss in income. Essentially, while Ethereum's network expanded, it weakened its financial standing as gas fees fell. This raises questions about Vitalik’s decentralization strategy—if revenues remain low, can Ethereum still fulfill its ambitious roadmap?

Decentralization: A Long-Term Value Proposition for Ethereum

The fundamental-focused approach of Ethereum in 2025 has led to a split among investors. On one side, the widening gap between technical indicators and blockchain data suggests that long-term commitment is more vital than short-term speculation, which has notably impacted shorter-term holders (STHs). Consequently, ETH’s return on investment for 2025 ended with a loss of 10.97%, illustrating the risks involved.

Conversely, some investors believe that the lower costs and increased capacity of Ethereum will eventually compensate for the revenue loss, particularly as more applications are developed. An example of this optimism is JPMorgan's recent tokenization efforts on Ethereum.

ETH Source: CryptoQuant

Looking ahead, 2026 could further highlight this divide. The result? A deeper commitment to the long-term vision of Ethereum. By the end of 2025, Ethereum’s exchange reserves decreased by 20% to 16.6 million, despite experiencing price volatility, indicating that fundamentals may start to outweigh speculative trading behaviors.

With Vitalik hinting at an even stronger commitment to decentralization, Ethereum is poised for long-term value creation. Over time, this approach could help mitigate the effects of market volatility and support Tom Lee’s predictions for ETH in 2026.

Conclusion

In conclusion, as Ethereum prepares for 2026, the emphasis on fundamentals and decentralization may well dictate its future value. Investors must weigh these aspects against the volatility of price movements, ultimately influencing their commitment to Ethereum's long-term vision.