ETH: Assessing Ethereum's Fundamental Setup

Summary Ethereum's 250% rally since April is driven by surging investment demand, especially from Treasury companies and ETF flows, closing the gap with Bitcoin. On-chain data shows Ethereum now leads Bitcoin in daily active addresses and transferred value, and dominates stablecoins and real-world asset tokenization. Despite strong usage trends, Ethereum's network fees remain weak, pushing its price-to-fee valuation to a five-year high and raising valuation concerns. Given current extended valuations, I rate both ETH and ETH-USD as holds, but view significant dips as attractive long-term buying opportunities. The meteoric price rise of Ethereum ( ETH-USD ) since the April lows has been nothing short of monstrous: ETH-USD Monthly Chart (TrendSpider) Since early-April, ETH is working on its third green candle in four months with the price of the coin rallying roughly 250% over that time frame. Driven largely by ETH recently getting the 'Treasury Strategy' treatment that we've seen benefit Bitcoin ( BTC-USD ) over the last couple years, ETH is currently flirting with all time highs and a monthly high close for August. In this article, we'll take a long overdue look at the fundamentals of Ethereum as an investment idea as well as the Grayscale Ethereum Mini Trust ( ETH ) to deduce if ETFs are still the best way to play Ethereum long term. The Treasury Strategy Comes For ETH I think it's important to keep in mind what the real drivers of ETH's performance have been over these last few months. Anyone who has followed my work the last year or so is likely aware of this; but ETH and BTC continue to be capital flow stories. For most of 2024 and 2025, investment demand for Digital Assets through more traditional securities has greatly favored BTC over ETH. That is no longer the case. Digital Asset Flows (CoinShares/Bloomberg) We can see in the data above that essentially all of August investment demand has been for Ethereum. Bitcoin is actually negative month to date while ETH has seen just under $3 billion in positive net flows over just two weeks. This discrepancy has been so intense, that ETH is even beginning to close the gap between the two assets on a year to date basis. Competing with ETF investors on the bid, ETH Treasury Companies have also entered the arena: As of August 20th (StrategicETHReserve.xyz) There are currently no less than 14 publicly traded companies that are acting as Ethereum Treasury businesses according to StrategicETHReserve. I've covered a handful of them over the last month or two. There are three that are clearly dominant in their ability to raise capital to buy ETH; Bitmine Immersion ( BMNR ), SharpLink Gaming ( SBET ), and The Ether Machine ( DYNX ). Together, those three entities have acquired roughly 2.6 million of the 4.1 million ETH held by publicly traded companies. Perhaps more impressive than the ETH held by these top three Treasury entities is the speed with which they have been able to amass these ETH holdings. ETH Holdings by Public Companies (StrategicETHReserve) At the end of June, there was just 1.2 million ETH held by all companies in the public markets. Meaning, this figure has more than tripled in just 6 weeks. In the process Bitmine Immersion has passed every single ETH ETF in the US for ETH holdings with the loan exception of the iShares Ethereum ETF ( ETHA ). What is notably different about buying ETH for corporate treasury over something like BTC is the reality that ETH can be staked natively for in-kind yield. Given that, it isn't actually all that unreasonable to pay a premium to mNAV for ETH Treasury companies since the assets are indeed being monetized. This all brings us to a key question then; is this ETH hoarding driven by strong trends in usage/utility or is it more speculative in nature? The answer is probably a little bit of both. On-Chain Data and Valuation In a recent piece covering the Fidelity Ethereum ETF ( FETH ) for Seeking Alpha, I detailed why I felt there was actually some merit to the hype we were seeing in ETH. Namely, Ethereum's very real dominance in both Stablecoin supply and RWA: Stablecoin Supply Share by Chain (Artemis) At 53.5% market share, Ethereum is by far the largest player in the Stablecoin game with $146.8 billion of the total $274 billion supply. And that share has been growing since the end of 2024. Ethereum claims a similar share of the RWA market where tokenized Gold , treasuries, and private credit now exceed $25 billion combined. My view continues to be that a significant portion of this renewed interest in Ethereum is from the post-GENIUS Act stablecoin narrative and the idea that Ethereum will be a major winner in that category. I do happen to share that view longer term but think that the current form of stablecoins - ones that completely lack any user privacy whatsoever - are unlikely to be adopted without both UI improvement and better privacy protection at the application layer. Regardless, there are very positive usage signs for ETH that I think are worth pointing out. DAAs, 30 Day Average (CoinMetrics) On a rolling 30 day average, Daily Active Addresses (or DAAs) for Ethereum are quickly approaching an all time high. Perhaps more importantly, ETH just passed BTC in the metric on August 17th. ETH also just passed BTC in 30 day average transacted value on August 15th: Transferred value, 30 Day Average (CoinMetrics) So by both users and transferred value, ETH is now beating BTC over 30 day rolling averages. It's not the first time ETH has passed BTC in both of these metrics, but as far as I can tell, it is the first time ETH has passed BTC in both of these metrics at the same time . Still, despite all of these positive trends for ETH, a large increase in fees still eludes the network: ETH Fees for Circulating P/F Ratio (Token Terminal) The long term trend for monthly fees paid to transaction validators in ETH has been quite poor over the last 18 months or so. At just $49.7 million in fees for the month of July, the year over year change for July fees was down 47% from $94.6 million last July. Halfway through August, this month isn't looking all that much better with just $24.7 million in fees through the 19th. Meaning if we want to view Ethereum through anything resembling a traditional valuation metric, ETH-USD's 1,008x circulating price to fee multiple is more extended than it has been at any time in the last 5 years. In fact, you'd have to go back to February 2020 to find a time where ETH's P/F valuation was this lofty. Back then, ETH was trading near $300. The coin certainly 'grew into' that valuation given all of the developments in DeFi and stablecoins. But it wasn't a journey without large draw-downs. The Grayscale Ethereum Mini Trust After initially launching with just 292k ETH in AUM, ETH has doubled supply to become a top 4 Ethereum ETF by total holdings. The fund is now within striking distance of overtaking FETH for the third spot by AUM: Fund Name Issuer Expense Ratio AUM iShares Ethereum Trust ETF ( ETHA ) iShares 0.25% $14.70B Grayscale Ethereum Trust ETF ( ETHE ) Grayscale 2.50% $4.57B Fidelity Ethereum Fund ETF Fidelity (FMR) 0.25% $3.18B Grayscale Ethereum Mini Trust ETF Grayscale 0.15% $2.92B Bitwise Ethereum ETF ( ETHW ) Bitwise Investments 0.00% $558.42M Source: Seeking Alpha, As of 8/20/25 While it is essentially iShares first and everyone else competing for second place, Grayscale's Ethereum Mini Trust has been a success for both Grayscale and shareholders, from where I sit. In addition to limiting the fee flight supply bleed out of ETHE, the fund has the second best total return of the four major ETH ETFs over the last 6 months. Data by YCharts At a 51.8% total return since late February, Grayscale's mini trust is performing as designed and offers investors a much cheaper option for Ethereum exposure than its legacy Ethereum offering. All this said, spot ETFs that don't offer staking could realistically lose some luster to Ethereum Treasury companies in the public markets. Stocks like SBET and BMNR have been on explosive roller coaster rides since transitioning to ETH-related businesses. And depending on when one wants to start their performance comparison, the stocks have dramatically out-performed and under-performed the spot ETH ETFs like ETH or ETHA. My personal view is Ethereum exposure through the spot ETFs is the better play when mNAV multiples in the Treasury companies get extended. When those multiples are closer to mNAV, the Treasury companies might be more viable opportunities in certain scenarios. Closing Takeaways I remain of the view that Ethereum's fundamental setup is encouraging. Ethereum's daily active numbers are now highly competitive with that of Bitcoin; as is transferred value. The chain has a major lead over smart contract peers in both stablecoins and RWA. The real question is valuation. Despite these seemingly positive trends in usage, fees remain stagnant. Coupled with a 250% surge in coin price since early-April, Ethereum's price to fees ratio is the highest it has been in the last 5 years. That said, we've seen these valuation levels before. The chain had seemingly no real problem growing into its $300 coin price in February 2020 when we last saw these P/F valuations. But it's worth noting nothing moves in a straight line: ETH-USD February 2020 (TrendSpider) After hitting nearly $300 in early February 2020, the price of ETH retraced by nearly 70% in just four weeks. Do I think that can happen again? Unlikely. Recall what was happening during March 2020. By the end of that year, ETH was at $1,000. So even though I see some signs of fatigue in ETH, digital assets, and the equity market more broadly, I wouldn't necessarily be selling too much here. I'll reiterate both ETH-USD and ETH as holds today. But I think any serious dips going forward are likely good long term buys.