For the first time in history, ETH has fallen for three consecutive quarters, causing long-term holders to fall into losses: Why is ETH's fundamentals and price diverging?

As of July 1, 2026, according to Gate market data, ETH is trading around $1,580. This price level has retreated to levels seen in early 2021, meaning most of the gains over the past five-plus years have been erased. More notably, Ethereum has posted losses for three consecutive quarters—Q4 2025, Q1 2026, and Q2 2026—the first time this has happened since the mainnet launch in 2015. This historically rare trend is profoundly impacting the cost structure of long-term holders and prompting a reassessment of the relationship between ETH fundamentals and price.

What Does Three Consecutive Quarterly Losses Mean in Ethereum's History

Since its inception in 2015, Ethereum has experienced multiple extreme market events, including the 2018 bear market, the March 2020 liquidity crisis, the May 2021 policy shock, and the FTX collapse in 2022. However, in none of those downturns did Ethereum record three consecutive quarterly losses.

The magnitude and persistence of this decline are unprecedented. In Q4 2025, ETH fell 28.28% for the quarter; in Q1 2026, the decline widened to 29.26%; and in Q2 2026, it closed down 24.79% to 25.65%. The cumulative decline over three quarters is nearly 70%, with ETH dropping from around $4,950 to near $1,600.

Historically, double-digit quarterly declines are not uncommon for Ethereum, but three consecutive quarters each with double-digit losses, with no signs of narrowing, indicate sustained selling pressure rather than a pulse-like release. This structural difference suggests that the current downturn is not triggered by a single black swan event but rather resembles a systematic valuation reset.

How Are the Cost Distributions and Losses of Long-Term Holders

On-chain data provides a quantifiable perspective on the situation of long-term holders. Glassnode data shows that currently only about 11% of ETH's circulating supply is in 3x profit, the lowest level since February 2017. For comparison, during the bull markets of 2017 and 2021, the proportion of supply in 3x profit exceeded 50%. In the current cycle, this metric never even reached the 30% threshold.

More notably, the current compression of ETH profitability is even lower than during the bear markets of 2019 and 2022. This means that even by historical bear market standards, the current unrealized position of long-term holders is abnormally depressed.

Short-term holders are also in a tough spot. Ethereum's 30-day MVRV ratio is currently -12%, indicating that investors who bought in the past month are suffering an average unrealized loss of 12%. When MVRV stays negative, it typically suggests the market is in a capitulation phase, and selling pressure may gradually exhaust as weak hands are flushed out.

From a realized price perspective, buyers in multiple time windows are currently underwater. This "widespread loss" pattern is historically seen as a precursor to panic selling by long-term holders, but also a signal that the market may be near a bottom—provided fundamentals can generate sufficient support.

Why Is ETH On-Chain Activity Diverging from Price Performance

While prices continue to fall, Ethereum's on-chain activity paints a very different picture. In January 2026, Ethereum's daily active addresses averaged around 927,842, peaking at 1.3 million. This figure not only far exceeds the peak of about 800k during the 2021 bull market but also significantly surpasses the 720k high in 2018.

In terms of transaction volume, Ethereum's average daily transactions increased to 2.05 million in 2026, up 31% from mid-2025. Weekly transaction volume on the mainnet once reached 2.9 million, a new all-time high. Meanwhile, the average network fee remained low at $0.1 to $0.2.

This combination of "high activity, low fees" is extremely rare in Ethereum's history. In previous network congestion cycles, rising transaction volumes were often accompanied by surging gas fees. The current low-fee environment stems from recent protocol upgrades—including the Fusaka upgrade introducing PeerDAS technology and Blob capacity expansion—which significantly improved the network's data processing capability.

The divergence between on-chain activity and price reflects two different signals: activity measures the actual usage of the network as infrastructure, while price is more influenced by macro liquidity, market sentiment, and capital flows. They do not always move in the same direction.

Is Layer 2 Scaling Changing ETH's Value Capture Logic

The rapid development of the Layer 2 ecosystem is one of the most structural changes in Ethereum's fundamentals. As of early 2026, Ethereum's total Layer 2 TVL has exceeded $28 billion. L2 networks process 95% to 99% of all Ethereum transactions. In terms of scaling, the combined scaling factor of L2s has reached over 100 times that of the Ethereum mainnet.

However, L2's prosperity also brings new discussions: when more and more transactions occur on L2s, does ETH's value capture ability as a "settlement layer asset" become diluted? While L2's low-fee environment improves user experience, it also reduces the scale of fee burning on the mainnet, affecting ETH's deflationary expectations.

On the other hand, the maturity of the L2 ecosystem opens up broader application scenarios for Ethereum. In 2026, blockchain technology is penetrating real-world sectors such as supply chains and energy as "trusted infrastructure." This shift from "niche financial scenarios" to "industrial infrastructure" may provide a support logic for ETH's long-term value that differs from previous cycles.

What Signals Are Institutional Actions Sending Amid the Price Drop

Against the backdrop of widespread pressure on retail and long-term holders, institutional behavior shows divergence rather than uniformity.

On one hand, some institutions are exiting. On June 30, 2026, corporate treasury firm FG Nexus liquidated all its 50,770 ETH, with an average purchase price of around $3,860, incurring total losses exceeding $85 million.

On the other hand, some institutions are continuing to accumulate during the price decline. BitMine recently invested $43 million to buy 27,084 ETH, bringing its total holdings to 5.7 million ETH, accounting for 4.7% of the total supply. Its average purchase price was exactly $1,569. On the same day, listed company SharpLink added 10,000 ETH counter-cyclically.

The diametrically opposite actions at the same price level reflect deep disagreement at the institutional level on Ethereum's long-term value. Market maker Wintermute commented: "The bear market is in its later stages, but it's hard to confirm that the true bottom has appeared." This cautious judgment indicates that the current market is in a phase lacking consensus—and a lack of consensus itself is often a precursor to major turning points.

Is the Gap Between ETH Fundamentals and Price Sustainable

The core issue Ethereum faces is whether the divergence between improving fundamentals and falling prices is a temporary misalignment or a sign of deeper structural change.

From a network usage perspective, daily active addresses surpassing 1.3 million, transaction volumes hitting new highs, and L2 TVL breaking $28 billion all point to one conclusion: Ethereum's actual adoption as a blockchain infrastructure is still expanding. From the supply side, the amount of ETH on exchanges has dropped to about 14.5 million, a record low, indicating no large-scale panic selling, but rather a pattern of gradual accumulation.

But from a price perspective, ETH has retraced to early 2021 levels, long-term holders are broadly underwater, and quarterly declines are the worst in history. This divergence suggests that the current price reflects more of a macro liquidity contraction and risk appetite decline rather than a deterioration in network fundamentals.

Historically, periods of significant divergence between asset prices and fundamentals are often not the end of a trend but a window for market repricing. When fundamentals keep improving while prices keep falling, the gap eventually needs to close in some way—either fundamentals deteriorate to follow the price, or the price reverts to reflect fundamentals.

Summary

Ethereum posted losses for three consecutive quarters from Q4 2025 to Q2 2026, with declines of 28.28%, 29.26%, and about 25%, respectively—the first time since the mainnet launch in 2015. Prices fell from around $4,950 to near $1,600, retreating to early 2021 levels. Long-term holders are broadly underwater, with only 11% of circulating supply in 3x profit, the lowest since 2017.

However, on-chain data paints a very different picture: daily active addresses surpassed 1.3 million, a new all-time high; Layer 2 TVL exceeded $28 billion; and ETH balances on exchanges fell to record lows. Network activity and adoption continue to expand, yet prices remain under pressure.

This gap between fundamentals and price is the core market characteristic of Ethereum today. It reflects both the macro environment's systematic suppression of risk assets and raises a question that requires time to answer: when actual network usage keeps growing while prices keep falling, is the market's pricing mechanism failing, or is it merely preparing for a longer-term value reassessment?

Frequently Asked Questions (FAQ)

Q: Is Ethereum's three consecutive quarterly losses the first time in history?

Yes. Ethereum has experienced multiple bear markets since its launch in 2015, but it has never recorded three consecutive quarterly losses. Q4 2025 (-28.28%), Q1 2026 (-29.26%), and Q2 2026 (about -25%) constitute the first-ever three-quarter losing streak.

Q: What is the current loss situation of long-term holders?

According to on-chain data, only about 11% of ETH's circulating supply is in 3x profit, the lowest since February 2017. The 30-day MVRV ratio is -12%, indicating that investors who bought recently are averaging a 12% loss. Buyers across multiple time windows are currently underwater.

Q: How low has ETH price fallen?

As of July 1, 2026, according to Gate market data, ETH is trading around $1,600, having retreated to early 2021 price levels.

Q: Why is on-chain activity diverging from price?

Ethereum's daily active addresses have exceeded 1.3 million, a new all-time high, surpassing the peak of the 2021 bull market. The price decline primarily reflects the impact of macro liquidity tightening and reduced risk appetite. On-chain activity measures actual network usage; the two are driven by different factors and do not always move together.

Q: What does Layer 2 development mean for ETH?

Layer 2 TVL has exceeded $28 billion, processing 95% to 99% of Ethereum transactions. L2 scaling has improved the network's scalability but also sparked discussions about ETH's value capture ability. Overall, the maturity of the L2 ecosystem opens up broader adoption scenarios for Ethereum.