Fundstrat Forecasts Ethereum to Drop to $1,800 in H1 2026

A recent screenshot attributed to Fundstrat Research has sparked discussions about the company's expectations for a significant decline in cryptocurrency prices during the first half of 2026, even as Tom Lee remains publicly optimistic about Ethereum.

Key Takeaways

Fundstrat predicts Ethereum may drop to between $1,800 and $2,000 in the first half of 2026.
Sean Farrell emphasizes a cautious near-term outlook amid elevated risks, contrasting with Tom Lee's bullish stance on Ethereum.
The analysis highlights mixed market dynamics, with potential long-term ETF demand but short-term pressures from various selling activities.
Farrell believes that Bitcoin and Ethereum could reach new all-time highs by the end of the year despite a forecasted dip.

Ethereum price news

This image was shared by Wu Blockchain via X, presenting an internal client note titled "2026 Crypto Outlook: Near-Term Headwinds, Second-Half Upside," recorded on December 17, 2025, at 7:34 p.m. ET.

Fundstrat's Cautious Outlook and Tom Lee's Optimism

The note, authored by Sean Farrell, Fundstrat's head of digital asset strategy, presents a base-case scenario that anticipates a "meaningful drawdown in 1H 2026," suggesting target prices of $60,000–$65,000 for Bitcoin, $1,800–$2,000 for Ethereum, and $50–$75 for Solana. The note mentions that these price levels could present attractive buying opportunities as the year comes to a close. If their predictions are inaccurate, Farrell prefers to adopt a defensive stance until stronger market signals emerge.

The estimated range for Ethereum has generated considerable discussion, as the cryptocurrency is currently valued around $3,000. A drop to $1,800 would signify a substantial decline.

The controversy partly arises from the contrast to Lee's statements. During Binance Blockchain Week, he asserted that Ethereum was "severely undervalued" at approximately $3,000, presenting a starkly different perspective from the research that indicates a possibility of falling to the high $1,000s. In recent weeks, Lee has even suggested that ETH could soar to $20,000 next year and $62,000 in the coming years.

On December 20, Farrell directly addressed the situation via X, indicating that the framing of an "internal conflict" does not accurately reflect Fundstrat's operational methodology. He explained that the firm employs multiple analysts with distinct processes tailored for various client goals and timelines.

According to Farrell, Lee's analysis is designed for large institutions considering allocations of 1%–5% towards Bitcoin and Ethereum and focuses on long-term macro trends. In contrast, Farrell's research is intended for investors who hold a larger percentage—approximately 20% or more—of their portfolios in cryptocurrency, where active risk management and rebalancing are more critical than adhering to a long-term investment thesis amid market volatility.

This distinction is vital in understanding the targets discussed in the leaked notes. Farrell emphasizes that his approach is not labeled "bearish," but rather "cautious in the near term." He believes that markets appear to be priced for nearly optimal conditions while elevated risks exist, citing potential government shutdowns, trade volatility, AI capital expenditure uncertainty, and the transition of the Federal Reserve chair, in addition to tight high-yield spreads and low volatility across various assets.

Farrell also pointed out mixed market dynamics. He suggested that while long-term demand for ETFs might grow as major firms combine forces, immediate challenges remain due to "OG selling," miners, fund redemptions, and the potential for an MSCI MicroStrategy delisting—an issue of concern because it indicates that risks extend beyond direct cryptocurrency assets to the broader crypto-equity markets, which are critical indicators of liquidity and investor sentiment.

His stated base case is for "an early-year bounce followed by another 1H drawdown, creating a more attractive opportunity into year-end." He further added that if he is mistaken, he would prefer to wait for confirmation, such as trend breaks, flows, momentum shifts, or a clear catalyst, confirming the idea that cryptocurrency is reactive, and patience is essential during uncertain times.

In a point that many missed during the initial wave of reactions, Farrell indicated that he still expects Bitcoin and Ethereum to "challenge new all-time highs by year-end," suggesting that the traditional four-year cycle might be altered by a shorter, shallower bear market period. "For those who tuned into the outlook: I still expect Bitcoin and Ethereum to challenge new all-time highs by year-end, effectively ending the traditional four-year cycle with a shorter, shallower bear," he stated on X.

As of the time of this writing, Ethereum was trading at $3,043.

Ethereum price chart
ETH price, 1-week chart | Source: ETHUSDT on TradingView.com