Bankless - Where is ETH in the cycle? | Michael Nadeau

Episode Date: March 11, 2026

Ethereum underperformed this cycle, and investors are asking the big question: did ETH just skip a cycle, or is something deeper going on? Michael Nadeau joins Ryan to break down where Ethereum sits in the market cycle today, why several of his key indicators suggest ETH is entering a fair value zone, and whether the true macro bottom could still lie ahead. They also unpack why ETH struggled despite improving fundamentals. Mike explains how Ethereum’s L2 roadmap may have improved the network while weakening short-term value capture for the asset itself, and what signals he’s watching (MVRV, supply in profit, the 200-week moving average) as he looks for the next expansion phase. Michael Nadeau & The DeFi Report: https://x.com/JustDeauIt https://thedefireport.io/ --- 📣GALAXY | INSTITUTIONAL DIGITAL FINANCE https://bankless.cc/Galaxy --- BANKLESS SPONSOR TOOLS: 🔮POLYMARKET | #1 PREDICTION MARKET https://bankless.cc/polymarket-podcast  🪐GALAXY | INSTITUTIONAL DIGITAL FINANCE https://bankless.cc/galaxy-podcast  🏅BITGET TRADFI | TRADE GOLD WITH USDT https://bankless.cc/bitget 🎯THE DEFI REPORT | ONCHAIN INSIGHTS https://thedefireport.io/bankless 🌍 WORLD | FULLY ONCHAIN EXCHANGE https://bankless.cc/world --- TIMESTAMPS 0:00 Intro 3:50 The History of ETH Cycles 5:41 Analyzing Performance Trends 8:32 The Impact of L2 Roadmap 10:24 Roadmap Decisions & Market Perception 15:50 Valuation Metrics Explained 20:08 Disparities in Valuation Methods 23:22 Navigating Market Conditions 26:14 Nation-State Metaphor & Valuation 27:45 Revenue and Economic Impact 33:42 DEX Volumes & Their Implications 37:25 Stablecoin Supply on Ethereum 38:09 Cycle Metrics & Analysis 44:22 Fair Market Value Insights 50:40 Evaluating ETH for the Portfolio --- Not financial or tax advice. See our investment disclosures here: https://www.bankless.com/disclosures

Bankless Nation, today we're going to check in on Ether, the asset. Where is ETH in the cycle? My favorite cycle investor, Michael Nato from the Defi Report is on the podcast today. We do these episodes on the bankless feed every month. And this one, I asked Mike to prepare little information for the ETH holders among us. Mike and I have talked a lot about fair market value metrics for Bitcoin, the weekly moving averages, MvRV, all of the metrics. We've looked at many charts about Bitcoin, but ETH has its own cycle that is related to the broader crypto cycle, yet also independent of Bitcoin.

So what do Mike's numbers say about Eith price in the months to come? I want to know if he thinks it's bottomed. If not, when is it going to bottom? Eth is one of three assets that Mike has held from the last cycle. So I know he owns some. Is he planning to buy more? if so, when. Now, I should qualify, unlike many guests on bankless,

Mike is not an eth permable. He is bullish, eth has been bullish, ETH various times, but he's looking at this from a fairly neutral perspective. That is, what do the on-chain fundamentals actually say for this asset? Mike, it's great to have you. I know Bitcoin is your favorite asset. Historically, ETH has been a second, maybe not a close second, but definitely a second.

Is ETH still your second favorite asset in crypto? Or does this cycle, does it have to prove itself once again this cycle? Hey, Ryan. Yeah, great, great to be here. And that's a great question, I think, to lead in here. I would say that the way I think of this is I think of Bitcoin as sort of a thing that we want to anchor our portfolio in. We've had periods where we were more bullish on ETH, less bullish on ETH. We still own some ETH currently in our portfolio.

and, you know, one of the things that I like about the cyclicality of the crypto markets and just kind of like the sort of four-year nature of these markets is that we get a chance to kind of like underwrite our thesis for Bitcoin, for ETH, for other assets that we may want to invest in. And so I think this episode today is kind of an opportunity to kind of go back and sort of analyze like just high level, like what has happened with ETH of these last few years, you know, where are we going and kind of get into some of the kind of like where are we at the cycle are we bottoming right now. So yeah, excited to get into it. But I would say, to answer the question, Heath has to prove itself to me. We can kind of get into what I'm looking for in this episode.

All right. So Heath has an opportunity to prove itself to Mike this cycle in order for him to re-underwrite whether it should be included in the Defi Report portfolio. Before we get into this episode, want to thank our friends and sponsors over at Galaxy. This one is for the institutional capital listening, whether you are looking at the future of finance or the backbone of the next industrial revolution. That, of course, is AI. Galaxy is the name you need to know. They're a global leader, not just in crypto and digital assets, but also AI data infrastructure. You know the ticker. They are GLXY. They have a bunch of crypto offerings, including next generation. institutional training,

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Go check them out. There's a link in the show notes. All right, Mike, as we enter this episode, ETH Price is just hovering above 2K. So it's hanging in there in this bare market. I actually want to go back and talk about the history of ETH across the three cycles that it's been around. So it hasn't

been around as long as Bitcoin, but it's been around for a while. We've got 10 years or so clocking in. So there's been three cycles that ETH has, you know, boomed and then busted so far. The first was 2017. And the bottom of that cycle, you know, sometime in late 2016, ETH was $8. So just imagine that. not 2K, but $8. In 2017 at the peak, this lasted into January 2018, ETH went from $8 to $1,400. So this was incredible growth. This was 175X in the first cycle.

So remember that. Cycle 1, 175X from troth to peak. Cycle 2, this was 2021, we saw a 61x gain. So that's 6,000% The troth there, we hit this in December 2018, $80 by November 2021, that turned out to be the top,

we were at 4,878. So 61x in cycle 2. 175X cycle 1, 61X, cycle 2. Let's talk about the most recent cycle that ended in 2025. So there, we troughed down to in June, 2022, $881, and then our peak for this cycle was $4,953. So barely an all-time high eking in from the previous

cycle. So the gain this cycle wasn't 175x, wasn't 61x, it was 5.6x, all right, a much smaller number. And so I think a lot of investors in crypto and for ETH right now are asking this question. Was this just a skipped cycle for ETH? Or is this now the new normal? Like that level of performance is kind of anemic compared to previous cycles. Is that just where we are now? Or do you think for whatever reason, this cycle just was not favorable to ETH and it'll come back stronger next time around? Yeah, I think this is the big question. And that's a very interesting kind of just framing of just kind of those diminishing returns of the last three cycles. Maybe if you just zoom out to like the max on that chart, right?

We kind of look at this a little bit from a broader perspective. And what you can see here is a rising sort of, you know, base, which is a, which is a good sign. And I think a healthy chart, you can see these massive moves that we made in the first two cycles. And then, you know, in this last cycle, we've mostly just actually sort of traded within the range that was established back in 2021, 2022. which is interesting. This is unique for ETH. And if you look at a lot of crypto charts out there, like this one's unique, right?

It used to look like most of the other ones where you had the first like sort of Bitcoin, you know, big move back in 2017, and then you had 21. But most of the assets out there, like you see either they just never come back or they have another big, you know, third peak with ETH. We didn't get either of those.

sort of stayed in the middle zone. So I think this can be, you know, bullish from the perspective that it's essentially just been kind of like, you know, sort of turning over the holder base for about five, you know, years or so now. And you can kind of look at this. You could go back and say, you know, it maybe a bit barely sort of got to a new all-time high this year. And it's trading at, you know, a level right now that it was similarly trading at, you know, four or five years ago. And you could ask yourself, is that, you know, bullish or bearish? And I think, you know, the way I think about it is I kind of go back to 2021, 2021, and think about, you know, just where Ethereum was on its roadmap and, you know,

where it was in terms of fundamentals and users and all the network effects, all of the tooling, all the developers, all of the stable coins, and just kind of like everything that's kind of playing out on Ethereum, and we've seen all of those metrics improve, but we haven't seen it reflected in the price action. And I think the thing that this really comes back to and why Heath may be underperformed a little bit in this past cycle is just the nature of the L2 roadmap. And this was something that, you know, we had something called, you may recall, Ryan, the Ethereum investment framework that we used to put out on a quarterly basis. And we were sort of essentially trying to lay out the roadmap for ETH and then how that would impact the sort of economics of the chain over time.

And we accurately forecasted that the L2 roadmap would create this, you know, sort of diminishing value capture at the L1 level. But what we did not sort of forecast correctly was that the market perception of that and just the fact that, the fact that, the fact that, that basically what I think happened was Ethereum sort of disrupted itself, right, so that it could grow and so that we could scale via these L2s. And in doing so, they sort of like made the product better for the L2 customer, but sort of, you know, hurt themselves in the near term. And the big question is like, is this whole vision of the L2 roadmap, we can kind of get into how that's sort of evolving a little bit, is this, is this, ultimately going to play out is Robin Hood and Coinbase and traditional finance? Are they going to come in build L2s that actually like have real apps and tons of, you know, users on these things that ultimately there's actually a little bit more of like a value share. It's more of a win-win with some value

accrual going down to the L1, which that impacts, you know, staking yields, some of those sort of ways that people think about valuing the network and just like the overall, you know, economic health of the network, you know, that didn't play out. I think that played a major role in sort of the, I would say, period of somewhat disillusionment that Ethereum went through during this past, this past bull market. So then is your explanation basically that the roadmap decisions that Ethereum made essentially caused ETH price to skip a cycle? Now, whether the next cycle will be, back to being more bullish again or not, whether it will continue to underperform and be anemic relative to previous cycles,

maybe you have to underwrite that on your own. But this cycle, the 2025 cycle, was it a case of just L2's not scaling in the way that Ethereum thought, the fees not accruing back to ether the asset, the market looking at the L2, roadmap and saying, okay, this might be okay for individual L2 chains, but it's not necessarily good for ether, the asset. I mean, because that strategy has more recently pivoted. And it started pivoting in 2025 and has accelerated into 2026. And it does seem like the direction of the Ethereum roadmap is much more about renewed focus on scaling the L1. And, looking at the L2 roadmap and saying, okay, that was okay, it was a little bit of a side quest,

mistakes were made, lessons were learned, what Ethereum really needs to focus on is DFI on the L1 and scaling up the L1 as the L2's scale in parallel. I mean, I guess you could make the case that those lessons have been learned, that the L2 roadmap was the reason that ETH did not perform this cycle, But now they haven't, Heath has an opportunity to overperform if it actually gets back on track and implements the L1 scaling roadmap.

Is that the story here? If you kind of squint, can you see that? I can see that. Yes, I absolutely can. And like, you know, when, you know, I was bullish on this L2 roadmap when this was really started to come out. So if you go back to like 2020-2020 period,

this is when optimism, you know, was coming out, rolling out. That was an exciting project at the time. I know bank was had a lot of coverage on that at the time. Arbitrum came out thereafter. Both of these lost tokens that actually performed decently well, actually, in a bare market. So there was excitement around the L2s. And I think the vision that we all had was that, you know, most of the apps would actually, you know,

deploy on these L2s, which we saw most of the most popular defy apps, you know, deploy on the L2s. but we haven't really seen like any new app. Like we've just kind of seen like uniswap deploy on L2 and other like popular defy stuff just deploy on L2s. We haven't seen like a breakout app that comes via this new product essentially that Ethereum has built. And I think that's been an issue. And then the other issue is, you know,

for this to really work from a user experience, these L2s need to be fused together. You need, you know, this bridging experience. I think there's a UX issue that still we've been promised that this would all fuse together and it would be seamless. That hasn't really happened yet. And I think these are the things that, you know, have, have, while this is playing out, then you have Solana sort of making a comeback that sort of captures the sort of more speculative

nature of the, you know, crypto markets that Ethereum did have, I would say, in the 2021 cycle. Some of that had gone to Solanas because of the fees on Ethereum. But I think it's just really a combination of all these things. And so I think when you kind of like zoom out, you could look at that chart and say, well, wait a minute. This is like a really rough period for Ethereum. I mean, we've gone through, learn all these lessons. And this is a big, you know, global asset.

And it's, you know, that chart looks pretty good to be, to be honest, given all of this. And so it has the put to because that chart still held up like that, it looks like we're establishing another. lower high, like to me it does have the potential to potentially outperform Bitcoin, you know, next cycle. It underperform Bitcoin, right? This cycle. And if you're a crypto investor, like, that's your benchmark. And so every dollar that you're putting into anything other than Bitcoin, like we spend a lot of time, you know, thinking about that and which assets, you know, have the highest probability about performing, you know, we're still sort of kind of like coming to our conclusions about whether ETH has that potential here.

But one of the big learnings from last cycle was that it's getting harder and harder to outperform Bitcoin, especially for things that are not newer assets that are coming out and launching during these bull market cycles. So yeah, a bit of a ramble. But I think, you know, this is an interesting story. We're going to get into some of the data. We'll get into some of the fair value metrics. But I think it's an interesting setup.

You do have, you know, like I said, you have Coinbase, you have Robin, and you have major builders here. And it comes down to, are we going to see traditional finance? Are we going to see just this kind of this merger of tradfied crypto here in this, maybe in this bare market as we get, you know, regulatory clarity. So let's talk about another point of confusion, I think, for the market investors, at least I'm somewhat confused going into this, which is ironic given. I think that's been almost a genesis question for bank lists is, how do we value these crypto assets like Bitcoin and Ether and OnDown? There are many different ways you can use to value Ether the asset. This is a website I have pulled up called EthVal.com. It's pretty good. It's a composite of all of the different ways that have been popular and have some data behind them.

But if you were to group these different valuation mechanisms for Ether the asset, And this is independent of how successful Ethereum is as a network or the roadmap. What we're talking about here concretely is, all right, based on the success of the Ethereum network, how should investors think about ether the asset in terms of what its fair market value prices, what the fundamentals are? And there's roughly, as far as I can tell, like three different categories of metrics. One is you just think of ether as a monetary asset like Bitcoin or like gold. It's a sovereign, a non-sovereign, doesn't have an issuer store of value, has a scarcity

story, a little bit different than Bitcoin in terms of its scarcity story, but still a scarcity story. And number goes up because people believe it's a store of value asset independent of fiat-based systems. And so it's an alternative to that. That's one set of metrics that you can used to value this thing. Another set on the other end of the spectrum is the Ethereum network does generate some fees. And you can almost think of this as like tax revenue of the network and it is able to collect some of these fees as, say, taxes and pass them on to those that are staking ethia asset. And so there's cash flows actually attached to that. And so you get, you know, price to sales ratios and you get fee yield type of money.

ratios on that, or you can look at kind of how much cash flows back to stakers and value it based on almost like a tech stock inequity, some sort of discounted cash flow a table. There's a third class too, which is you just think of this as a network, an economy and a network, and you think about the value on top of that network, all of the assets and stable coins and tokens, and you create some sort of total value locked multiple. And you look at historical. And you look at historically, you know, how the price has reacted to a certain amount of value on the platform, then you just say, well, if that value goes up, then ETH price should increase. There's all of these Metcalf law type network mechanisms where you're essentially

saying that ETH the asset should be some sort of portion of the Ethereum economy and all of the assets on top of Ethereum. Those are like three different categories of how you value ETH. What's fascinating here, Mike, is when you look at the variance of these categories, if you took something like price to sales ratio based on the last 365 days of L1 fee revenue and blob fee revenue, either the asset would be worth about $2 right now. Okay? On the other end of the spectrum, if you look at kind of ecosystem settlement, use some of these network metrics and use some of the store of value type metrics, This is one MV equals PQ. This was an evaluation metric, kind of popular in the 2017 era. ETH would be worth on that side $24,000.

All right, look at this disparity in two different metrics. You have $2 versus $24,000. Now, we have an ETH price point right now. The market has deemed that ETH is worth $2K right now. So what that tells me is the market is just trying to figure out how the hell to actually value this asset? Like, is it a tech stock? Is it some sort of network valuation, you know, economy that you're plugging for ETH price? Is it a store of value? Maybe the price just reflects that the market is uncertain in terms of which metrics actually apply to this thing.

How do you see ether the asset and which metrics in your mind should apply to its valuation? Yeah, this is great, Ryan. You know, what's interesting here, as well as like when you look at that price-to-sale ratio, you know, if you go back to 2021, when Ethereum was printing cash, right? This was when the L-1, there were no L-2s, every user was on the L-1, and you had massive congestion. We all knew that like that wasn't really sustainable, but the actual story at that time was cash flow. You could do a DCF and the numbers actually like sort of checked out.

So it was totally different stories. So this has evolved quite a bit over the years. and it's due to, you know, the technical upgrades and just the way that Ethereum has kind of laid out its scaling roadmap. You know, my view on this, and we've tried to cover this topic a few different times, we wrote a piece last year called, you know,

how to value an L1, and people can check that out. We focus more on, like, we think the way to think about L1s is like as nation states and the token is the currency, and basically the nation state, you know, provides the infrastructure, like sort of like how a country, you know, provides like a set of rules and property rights and things like this. And like the blockchain handles that. And then it charges

the tax to all of the users and the users have to use that currency to access services. So I think it functions very similar to like that. I like that model. Now, you know, what is the most important sort of like valuation metric? You know, I think that it comes back to a few different things. So I look at token economics as one thing that I think is very important. Ethereum has very strong token economics, even with its sort of REV and it's like cash flow being down. It's still, you know, less inflationary actually right now than Bitcoin is. So it has strong token economics. The other thing you can look at is the sort of like TVL, GDP, like what's the value of the economy on top of this thing? When you think about East valuation right now around in terms of

market value. Let me just pull it up real quick. About 250 billion, ETH has about 180 billion of stable coins on it. If you factor in the rest of the TVL, you know, it's certainly much higher than the market cap. That's another way. And typically, we've seen fair value when the market cap converges to sort of like the combination of stable coins and other TBL assets. So to me, it's a combination of the sort of cash flow story, there is cash flow here that is different from Bitcoin, the token economic story, and then the fundamental story. I try to roll all of that up and then focus on what I think is the most important thing in the context of sort of like this idea of a nation state and why do

certain currencies have more strength than others in a nation state model? It's because of capital flows, sort of the rule of law and monetary policy, all of these things. And that's kind of like a holistic way to think about this. I mean, traditionally, Eat has sort of just been valued, like, relative to Bitcoin, I think, for the most part. And the market hasn't really landed on, like, what is the key sort of valuation criteria just yet. Markets are reacting to a world that feels anything but stable. Inflation is sticky, geopolitical risk is rising and capital is moving between crypto, commodities, equities, and currencies faster than ever.

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with more than 1.6 gigawatt. of approved power capacity, making it one of the largest sites of its kind. From global markets to AI-ready data centers, Galaxy is serving the digital asset ecosystem end-to-end. Explore Galaxy at galaxy.com slash bankless or click the link in the show notes. I do think you're onto something with this nation-state metaphor, really, and if you kind of take that, throughout history, there have been different nation states that have been blessed with the exorbitant privilege of having other nation-states actually wanting to use

their currency as a store of value and also as a medium of exchange. I mean, the U.S., most notably right now, has that exorbitant privilege. And so, you know, one wonders which blockchains might be blessed with that and which ones aren't. Certainly, it seems like Bitcoin has been blessed with that in the past. Will it be the only one? Will there be more? These are kind of the outstanding questions. but still the nation state metaphor, analog valuation framework does fit the mold for that case, too, even in the story of value case. Yeah, I think so. I think so.

And I've had the view that, you know, as a crypto analyst and as somebody who's, you know, constantly looking at data and trying to figure out, like, what's driving the prices of these things, what should drive the prices of these things. You know, I've had the view that, like, we're eventually going to sort of land. on some new standards in terms of how this is all going to work. You know, we are still pre-regulation. I think, you know, the crypto markets have been around for a little while, but we are still pre-regulation.

So I think once this, you know, once we get the Clarity Act, you know, through, hopefully that is the legislation that we want. Once that gets through, I think, you know, and this just becomes much more open to traditional finance and how they're going to start to integrate. I think we will start to land on some frameworks. and I expect them to come from crypto-native analysts and not traditional finance analysts. And so I think they're going to adopt some of the thinking that we've already established. And we'll see.

It's, you know, be patient. I've been saying this for years now. And it hasn't really played out. But, you know, if these networks continue to be adopted and continue to produce interesting data and interesting fundamentals, like we will absolutely find a way. And the market will absolutely, I think, converge. on a sort of standard way to think about them. Well, let's take a look at some of those fundamentals and those numbers that at least you look at.

So one of them is Ethereum revenue right now. So what is that showing us? Yeah, I mean, this is the story. This is the L2 roadmap, right? It's just sort of visualizing the sort of impact on the economics of the L2 roadmap. And where the chart really kind of drops off is like early 2024. that was right after we introduced like blobs, right? And so it made it really cheap for for L2s to anchor data onto Ethereum.

Basically, Ethereum's revenue declined significantly because of that and also just because there's a decent, you know, subset of Ethereum L1 users that now use the L2. And so you're not getting those kind of L1 base fees. And this is really kind of, I think, you know, visualizing it. This is the L2 rent paid down to L2. one and that chart shows like it's really just the upgrade of a theory of improving itself,

which to me is a theory of disrupting itself is really what happened here. And so that's not like you know uncommon. Like this is something that like software you see this. And the question is and we saw it we saw for years Amazon essentially, you know, operate at losses because they wanted to keep their costs really low and they wanted to scale their network effects. And that worked out very well for Amazon. And so what we're seeing right now with Ethereum is they've sort of like disrupted themselves. They've improved their product for their end customer, but it's not really a great tradeoff in terms of like the value accrual that that Ethereum is capturing. I do think there are ways that they can potentially capture more of that value in the future. But I think this is a story

that the charts kind of just like visualize what is what is played out. What's interesting about this at some level is, yes, fees have collapsed. I guess the sunny side of that or the optimistic take on that is even the spite of fees collapsing, eth is still valued over 2K. You know what I mean? So there's something else that the market sees in here in the price of ether that is not being reflected in fees. And it just is the case that it could come to pass that fees never ever recover to the 20, 2022 highs. The reason for that is if Ethereum continues to scale block space, both L2 block space

and also L1 block space, as it intends to as part of its roadmap, then you get less scarcity because you have more supply. And unless demand outstrips the new supply that you're creating, fees will stay low in perpetuity. But at some level, isn't that the success scenario? Isn't that what the Ethereum roadmap is supposed to do. It's supposed to scale cheap transactions. So you get in a case where if you're looking just at the fee revenue, it's not telling the full story for this asset. And I mean, that's similar for other chains too.

Like Bitcoin barely generates any fees and look at its valuation. So that's why it's complicated to just like, I don't know, look at the fee story and make any judgments here. Yeah, I would agree with all that. And I think this is where, you know, we talked about Ethereum having 180 billion of stable coins and the network is worth, you know, about, you know, 250 or 230 or so billion right now. So, you know, there are other ways to think about fundamentals separate from just the fees. You know, the way that sort of that decline and fees is impacting like the staking yields is we're just seeing, you know, that blue where we've got a chart here of the staking yield of eth over time going back to late 2020. and we had a pretty healthy sort of combination of new issuance,

which is network inflation that's compensating the validators, in combination with some MEV that's adding to the staking yield, and then you had priority fees that were all combining to produce a nice yield that was over 5%, you know, percent or so back in 2022. And as these network upgrades have come through, we're just seeing less of the sort of like, you know, fees that are that are adding to the East staking yield. It's just issuance now. It's like 90% issuance.

You see the far right of that chart. It's mostly just pink. So it's like almost all issues. It's about 90% over 90% is just coming from the, you know, Ethereum essentially minting new ETH, paying out the validators with that. The key point on this, and I think this is a very important thing for Ethereum is even with these low fees, and this is really important. but the inflation, they're still able, even though, yes, that is inflation, it's still like less than 1%. So you're able to compensate the entire supply side of your network. You know, do they want their yields to be over 3%?

Yes, I think so. But I don't see, you know, the validators like leaving the network because of this. And so you're able to- You're saying the numbers here, isn't it? And I recall you throwing some numbers out, but annualized issuance for Ethereum in terms of new ETH that is minted every year. Isn't that something like 0.6% or something percent? 0.6%. Right now it's about 0.83% annualized, which is around the same inflation rate as Bitcoin. And the reason that that's really important is you still have a, you know, you're basically

not diluted. There's a small amount of dilution coming to ETH holders that are not staking. But you're able to do that even when the network isn't producing a ton of, you know, it's just sort of pure organic economics, most other networks that have very low fee capture that are paying the supply side primarily with inflation have high inflation rates, right? This is the unique thing about Ethereum. And so ETH can be viewed as a store of value and have strong token economics even when the fee capture is at these depressed levels. I think that's really important. What do the Dex volumes teach you about Ethereum? So, you know, this is something that in terms of valuation, it doesn't really come in too much on Ethereum.

So the way I think about this is velocity, like absolutely batters and just like the speed that assets are moving on chain. And that can drive a lot of the network economics. And that's really the most important KPI on Solana. I think what it's interesting here is that dex volumes are down. About 56% or so, Solana was doing significantly higher dex volumes than Ethereum during the bull market. Ethereum's actually doing more now. So almost twice as many. This is just the Ethereum L1.

It's doing almost twice as much dex volume now in the bear market. So it's kind of like the tide has come out a little bit. We're starting to see kind of what's left. And Ethereum has a strong foundation, I think. I think is the kind of the key takeaway. but this metric is more important on Solana in terms of how it generates, you know, velocity on chain, which leads to MEV, which leads to, you know, base fees and staking yields on Solana. I think we made the point before that Ethereum is a bit more of a slow defy chain,

and that comes with a higher quality base of assets for certain that tend to perform better in the bear market. But whereas Solana is kind of high velocity types of. defy and use cases. So there's some separation in the design of these networks as well. This is a metric that has been pretty much up and to the right and looks like it continues to grow, which is Ethereum staple coin supply. And you just mentioned we hit over 180 billion, and that's all on Ethereum. Ethereum has kind of the bulk of staple coin supply in crypto. Is this bullish? I mean, this has not yet been reflected in price. you know, maybe you could argue it is when the genius bill went through if you got close to kind of

all-time highs, I believe. But do you think this has an impact on the price? It's, you know, it's been the big narrative. I think when Tom Lee, you know, got involved with Ethereum last summer, so this is one of the big things that he was sort of pointing to that Ethereum has roughly 60% of the total, you know, stable coin supply. Stable coins look like they're sort of the The chat GPT using Tom Lee. Yeah, there you go. That's the killer use case for crypto, which I think is all fair.

And yeah, Ethereum is the home for this. USDT is the most popular stable coin on Ethereum. It's about 53.6% of the supply. You know, what I'm interested in seeing how this sort of evolves is after we get the Clarity Act, you know, are we going to see more tradfi stablecoids start to come out, where are those going to be deployed? My guess is they probably will be deployed on Ethereum, and this is really going to boost.

I think of like the state, if you think of like sort of the, just the foundation, almost like when you think about a traditional company, do you think about the book value of the company? Like what is just like the actual hard value of all the assets of the company? And when you remove the premium,

like I sort of think of stable coins apply as like the hard value and maybe a few other things involving TBL, as sort of like the base of like what the economy is on top of Ethereum. And so, yeah, I think this is a strong sign that it's only down, you know, 2.7% even though the price is down, you know, closer to 60% or so. So I think, I think this is bullish. And it'll be interesting to see how it expands from here. It's also interesting to see during the bear market, right? So you said the fair market value of ETH, the total, you know, market cap of ETH is something like, like $250 billion as we're recording.

This number is $180 billion. So what happens if the value of ETH drops below the value of all staple coins on top of it? Does that signify under valuation or does that not matter at all? I guess the market's still trying to figure that out. Let's talk about the fair value metrics that you use, which are a little bit different than the valuation metrics that we talked about earlier. And this is, I think, your favorite way of assessing the fair market value of Bitcoin, the asset, which is to use things like realized value, MVRV, percent supply and profit, what are the whales doing?

Are they buying? Are they selling? At what stage in the cycle are we? These are kind of the cycle metrics that you've become famous for on the defy report. So what are ETH's cycle metrics right now? And what are they telling us about where Eith actually is in this bear cycle? Yeah. So pretty interesting here. We've got the last two bear markets. These are, like you said, these are like kind of the cycle metrics. This is more, you know, market value to realize values, Z scores, supply and profit, things like this. You know, I probably should have added in here a few of the other sort of metrics related to TVL, stable. coins, things like that. Maybe we'll tweet that out after the show. But, you know, what I see here is we're very close to like where we bottomed. You know, a lot of these KPIs are very close to

where we bottomed in the last bare market. So market value to realize value, that measures the, the realized value is a proxy or sort of the cost basis of the network. This is something we pay a little more attention to with Bitcoin just because Bitcoin is more of a store of value. network. It has, it's less utility. And so these numbers are not as precise, I think, because of the way that Ethereum moves on chain, because the way that this is, these, these metrics are calculated is it's just taking the, um, the, the, the, the, the, the, the, basically the price of the token. So if somebody sent you some ETH and they did that at $3,000 and you never made another transaction after that, then that wallet's cost basis would be at that like $3,000 price pay. It does this for every, you know,

every transfer in and out of these wallets. So, you know, right now it looks like at these, you know, I say that, but these metrics have been actually very, very accurate and provided a lot of signal for crypto analysts. So we bottomed in terms of MVR at 0.7. So actually below one, Bitcoin is at about 1.26 right now on this metric. We're at 0.84 right now. So you're clearly in what I would say is like the, you know, what looks like a cycle low zone.

We don't know if it's going to go lower. And I'm mostly, you know, paying attention to that 2022 column here because ETH was a very, you know, immature asset back in 2018. When we look at the Z score, again, close, you know, we're not below where we went to in 2022, but we're pretty close. When we look at the supply and percentage of supply and profit, you know, this is pretty interesting. We're actually below only about 39.4%. This is the entire network that we're factoring in here. you know, only about 39% of ETH holders looks like they're in profit right now. And that got, you know, that's actually lower than we went to in 2022.

ETH BTC ratio, this is just, you know, a way to, you know, relative to where Bitcoin's trading. What's interesting about this one is, ETH established its like cycle low for its ETHBTC ratio in April of 2020, 25, which is really. Oh, wow. So this isn't a 2022 KPI load. This one specifically happened in April 2025. Yeah, very kind of odd to see that happen. And we have got a chart here. We can go to after we finish on this one.

But it looked like ETH was probably at its most oversold level ever, actually in April of 2025. We can get there. But then we look at the 200-week moving averages as a metric that's worked quite well for Bitcoin. ETH has also traded below its 200 week moving average in the last cycle, and it's actually currently there right now. It's actually at a lower level than it was at the 2022 low.

So why don't we flip over to that next chart to give a little bit of a view of that? Yeah, here it is. So this is just showing the 200 week moving average, and the distance that that pink line gets below the blue is giving you, pretty good indicator of historically, you know, kind of where we could be at here in terms of like the big cycle. And we could see that, you know, we actually went to the lowest point ever below that blue line in April of 2025. And then that's basically what kicked off the run that right after that was when I think Tom Lee came on and everything kind of changed for a

brief moment there. But we never really, you know, pushed to like durable new all-time highs. So we're right now back at what I would say is pretty clearly fair value. And the way I think of these things is like, you know, it's possible for something like ETH, that it could actually just bottom before Bitcoin bottoms. That happened in June of 2022. That's kind of rare. Like most crypto assets actually bottomed like after Bitcoin or around the same time. So it's possible that Bitcoin, that ETH has actually bottomed. Like that's actually possible. It's also possible that we're going to to see more weakness for Bitcoin here at some point in 2026 potential weakness in the traditional markets. And, you know, that could bleed into, to ETH as well. But I would say from like a very

high level, like it's in like a fair, certainly in a fair value territory when we look at these types of metrics. And also if we look at sort of like the GDP type metrics and the TVL and, you know, just kind of the base of assets on the chain from that. perspective, I would say it's also in a fair value zone. So I know your base case is that Bitcoin will have further weakness this year and it could take some months to play out. But if we just go back to kind of the fair value KPIs for ether, the asset, could you translate this into like a price for ether or like a time range if maybe this plays out

as you're expecting? So it seems like we are in actually the fair market value zone. for ether of what you would call the fair market value, not necessarily deep value yet. And we had this conversation on the TDR podcast last week, the difference for Bitcoin between fair value, which is kind of, it's in that early stage right now, versus deep value.

And the returns can be much more drastic to the positive if you're buying in the deep value territory. So what's kind of from a price range perspective and a timeline perspective, your rough estimate of how long we'll be in fair value. And then what does deep value look like for Ether? Yeah, I think what was interesting last in the last cycle is that Heath actually went all the way down, I believe, to about 900 or so.

Early in that bare market, so May, June period. And that was the low. That was the low that established for the entire cycle. And then, you know, when we had the FTX, you know, capitulation, it actually never went back down to those lows. That's something I'm keeping in mind that that's possible that that could happen. In terms of like just, you know, how this can go in the timelines and things like that, you know, I think bear markets have historically taken about a year to play out.

And that's kind of my base case for this cycle. And, you know, I kind of, you know, if you zoom out and just think about, you know, things that are happening on like the macro side of things. and, you know, it's hard to see, like, an impulse of liquidity coming from either fiscal, monetary policy. We now have oil rates that are, that are, you know, rising and potentially, like, kind of a, you know, stagflationary setup here where it looks like inflation expectations are rising, growth expectations are slowing. Like, this is not, you know, really sort of bullish setup, I would say, for crypto.

it could lead to a situation where the Fed has to actually do some, you know, emergency rate cuts. And that would, to me, would be a good setup for ETH, for Bitcoin, for crypto largely. But that's kind of where I'm at. I'm, you know, we were risk off back in September, October period. We are now risk on, but I would say not like full on risk on. We've sort of trying to allocate in these fair value zones in line with what I think the probabilities are for potential, you know, deeper value opportunities. Yeah, and I know you've primarily in the risk on mode, you've just allocated to Bitcoin so

far and are looking to move kind of down the stack a little bit later in the cycle. So you expect this to play out. But roughly in my head, if I'm looking at these numbers, I'm kind of swagging it, right? We're at right now, at 2K, we're in sort of the fair market value zone, maybe the top end of that for ether. Deep value, I don't know, knock another 25% off or something like that, 1,500 and below, is that starting to look more like deep value for Michael Nato and the TDR for Ether? I think so.

I think we went down to like 1,700 or so in April. Like if we get there, that probably is a deep value zone. You know, we'll see. I mean, we've come down quite a bit. I think we came down to 1850 or so and now we're sort of bouncing. It feels like we're in the part of the cycle

where we've come in. to fair value. We got there fairly quickly. We're about five months into this bear market. And it feels to me like we're kind of at the part of the cycle where we're just going to kind of like chop around. You know, we're seeing some turmoil with, you know, traditional markets, with geopolitics, and like we'll see how this kind of gets resolved. But it feels like we're in the zone where we chop around, you know, try to find a bottom. And most of the work that we're doing right now is just try to assess that. And then we're, you know, essentially doing a lot of fundamental. research to try to decide which assets that we want to pair up in our crypto portfolio,

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how to navigate it. The best crypto cycle investor I know, his name is Michael Nato. He runs the Defi report. This is the guy that sent me a sell alert before the 1010 price drop happened. His cycle analysis has been absolutely on point. I've been following him for years. And this year, we started recording weekly podcast episodes. Each one we get into his portfolio, what he's holding, the market structure, entry targets, fair market value of Bitcoin and Ether, and where we are in the cycle, there's new episodes that are released every Wednesday. They're 30 minutes. They're short. They're punchy. I think this crypto cycle is harder to navigate than most. So let's do it together. Go subscribe to this podcast. Search the defy report. Wherever you get your podcast, YouTube, Apple, Spotify, or find a link of the show notes. There's a new episode waiting for you now. Okay, so let's talk about that maybe as we start to bring this to a close mic. So of course, an asset being in the fair market value zone is necessary, but not the only requirement for getting inside of the TDR portfolio and your portfolio, because what you're really looking for is assets that will outperform Bitcoin.

And I guess the question is, if ether is in the fair market value zone, I know you already have some, but this is Kerry Ford from last cycle in the TDR portfolio. You know, what does Ether have to prove to you in order to get in the portfolio this cycle? Obviously, it has to be in the fair market value or deep value zone for you to be a buyer. But there's all sorts of other crypto assets that you could buy or other assets in general. What are you looking to see specifically for ETH to re-underwrite it as a asset that you want to include into the kind of the early bull side of the cycle that starts to play out in 2027? Yeah, I think, well, I think ETH looks healthy to me. Like it was, I was growing more concerned, I would say, like last year and just seeing the reaction, you know, a lot changed.

Like I think Ethereum addressed a lot of these concerns that that were going on. And so I think it's in a healthy place. There's a little bit more of a renewed focus on the L1 and scaling the L1. So I think that's, it's in a good spot. For me, as an investor, what I have to look at is, is, okay, what are the other options here? what are the other things that I can that I could buy? And to me, it just comes down to like, do I have more confidence in those things? From a fundamentals perspective, from a valuation perspective, from a token economic

perspective and buybacks and things, you know, I'm trying to sort of analyze each asset separately and then decide which ones do I have the highest conviction, you know, are going to outperform. And so, you know, there are lots of assets that that you can put. into a portfolio, I'm confident that ETH is going to do well and have an expansion in the next cycle. And I would hope that it'll definitely get past those 5K all-time high. But the question is, do you have more conviction in that and ETH potentially outperforming Bitcoin this cycle? Versus, you know, there's probably five to 10 other assets that we're looking at that we haven't made any decisions on, but we cover these in the way.

watch list on a weekly basis. And that's that's kind of where we're at. People can subscribe if they want to find out, but we ultimately, you know, add to the portfolio. I can't wait to see where you end up with at this cycle. So let's wrap it here. And for bankless listeners, Mike and I do this every month we put this on the bankless podcast. Actually on a weekly basis, every Wednesday, we publish a new podcast on the TDR feed. And so if you're not subscribed to that, go take a moment to subscribe to that. You'd find it in Spotify. You can find it in YouTube. Just do a search. There's a link in the show notes and you'll get access to that. Actually, we're going to be recording an episode here shortly. So there might be something live for you on that feed right now. What's the episode that's coming out

tomorrow, Mike? Yeah. So, you know, one of the nice things, I think I kind of hinted at it a little bit at the beginning of this show is, you know, I view the volatility of the crypto asset class as like a feature, not just because you can sort of, you know, trade and get in and out of things. We're more of a long-term investor. So we trade these cycles. And what that allows us to do is kind of re-underwrite these thesis every four years or so. So we're actually doing like a health check on the Bitcoin network this week. We're just going to go through all the things that we think are most important to just like the health of the Bitcoin network to help re-underwrite our sort of like, you know, five to 10-year outlook for Bitcoin.

So that drops tomorrow and we'll talk about it on the Defi Report podcast as well. I can't wait to have that conversation. I know if you're going to be covering like quantum or security budget and some of those longer term concerns. But we'll talk about it there. Also, I believe the TDR Pro, you're offering one month free to bankless listeners right now. I am a proud, happy TDR Pro member, really inexpensive. The cost of a Netflix subscription.

If you want to try that for a month, you can do that. But it gives you access to Mike's portfolio in the TDR. He is right now, I believe, 40% crypto, 60% cash. So starting to move into that risk-on territory. You get research reports every week. You get data dashboards. You get the watch list. Mike, what else do subscribers get when they get the TDR pro?

Yeah, they get, so we do these cycle awareness reports. We actually just released one of those last week. That goes through a lot of the, some of the data that we went through for ETH, who went through that, a lot of it for Bitcoin last week. So you get cycle awareness reports, market structure reports, on chain data. And I think that really helps anchor people to just like where are we at in the cycle. And then we do the watch list reports every Friday. Those are a specific asset level reports where we go through the fundamentals.

And we're just like we've initiated coverage on those assets because we may include them in our TDR Pro active portfolio when we think it's time to be more risk on. So it's kind of like following investors journal to some degree. I would say, TDR Pro. Yeah, one of my favorite things is when I get the fat pitch email alerts from Mike indicating that he has just bought back in because that's always a bullish sign for me. So you guys can access that in a link in the show notes. We'll leave you with this. Of course, none of this has been financial advice.

You know crypto is risky. You could lose what you put in, but we are headed west. This is the frontier. It's not for everyone. But we're glad you're with us on the bankless journey. Thanks a lot.