Tom Lee: Lack of leverage and the "vortex effect" of gold caused Ethereum to plummet by 21%.

Fundstrat research director Tom Lee stated that despite Ethereum's recent sharp decline, it should be seen as an "attractive opportunity" because its fundamentals remain strong. This round of decline is mainly due to insufficient leverage and capital flow towards precious metals. According to CoinGlass data, the first quarter of 2026 is expected to become the third worst Q1 in Ethereum's history, with a 21% drop so far this year.

However, Lee pointed out that while the price is falling, Ethereum network's on-chain activity and fundamentals are still growing:

Ethereum's daily transaction volume reached a historic high of 2.8 million on January 15;

The number of active addresses in 2026 soared to a peak of 1 million daily.

Lee stated that during the crypto winters of 2018 and 2022, Ethereum's transaction activity and the number of active wallets declined, "which is the opposite of what we have seen in the past 12 months." "Therefore, the weakening of ETH price is more caused by non-fundamental factors."

Lee believes there are two factors continuously suppressing Ethereum's price:

First, since the flash crash on October 10, leverage has not returned to the crypto market;

Second, the sharp rise in precious metal prices has created a "vortex effect" that draws risk appetite away from the crypto market.