Tom Lee Explains Ethereum’s Price Dip: No Leverage and a Gold ‘Vortex’

Tom Lee says Ethereum fell 21% due to low leverage and a shift to gold, even as network activity and BitMine holdings increased.

Tom Lee explains Ethereum’s price dip by pointing to market structure rather than network weakness, as Ether fell 21% during the first quarter of 2026. 

He said the decline occurred despite rising on-chain activity and steady accumulation by large holders, including BitMine.

Ethereum Price Decline Occurs Despite Rising Network Activity

Ethereum has recorded one of its weakest first quarters in history, according to CoinGlass data. Ether declined by 21% year to date, marking its third-worst Q1 performance.

Tom Lee, head of research at Fundstrat, stated that the price drop did not reflect deteriorating fundamentals. He said network usage continued to rise during the same period.

Glassnode data cited by Lee showed daily Ethereum transactions reached a record of about 2.8 million on Jan. 15.

Active addresses also climbed to nearly one million per day in 2026. Lee compared current conditions with prior downturns.

He said activity declined during the 2018 and 2022 crypto winters, but current data shows the opposite trend.

“Thus, non-fundamental factors are arguably more the factors explaining the weakness in ETH prices,” Lee said.

Lack of Leverage and Precious Metals Shift Risk Appetite

Lee identified two main factors weighing on Ether price. He said leverage has not returned to crypto markets since the Oct. 10 market crash.

Without leverage, price momentum has remained limited even as network usage expanded. Lee noted that leveraged trading often plays a role during stronger crypto rallies.

He also said rising precious metal prices diverted capital away from crypto assets. Gold and silver attracted flows during recent market volatility.

Lee described this trend as a “vortex” pulling risk appetite away from digital assets. Investors shifted toward metals as markets faced broader uncertainty.

He said this rotation affected crypto prices even as blockchain fundamentals improved.

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BitMine Expands Ethereum Holdings During Price Weakness

BitMine, chaired by Tom Lee, increased its Ethereum exposure during the recent price drop. The firm acquired 41,788 ETH over the past week.

Lee said the company viewed the pullback as “attractive,” given rising on-chain metrics. He added that BitMine continued to buy during market weakness.

As of Feb. 2, 2026, BitMine held 4,285,125 ETH, representing about 3.55% of Ethereum’s total supply. The firm aims to reach a 5% holding target.

BitMine has staked roughly 2.87 million ETH. Its digital asset treasury also includes 193 Bitcoin and several equity investments.

The company reported total crypto and “moonshot” holdings valued at $10.7 billion. Cash holdings stood at $586 million.

Despite accumulation, BitMine reported large unrealized losses due to Ether’s decline.

ETH fell more than 25% in one week, dropping from $3,000 to around $2,200 before stabilizing.

Lee said Ether’s current price does not reflect its utility or long-term role. He maintained that market structure, rather than fundamentals, continues to shape near-term price action.

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