Why Ethereum Rises When Its Price Falls: The Data Tom Lee Sees

The crypto market is in pain right now. Bitcoin and Ethereum have both declined, portfolios are red, and the selling pressure feels relentless. Liquidations are happening constantly, and some investors are quietly moving money to “safer” havens like gold. The situation looks grim on the surface. But here’s what most people are missing: the data tells a completely different story about why crypto is going up long-term.

Tom Lee, who runs BitMine (a company holding substantial Ethereum positions), recently shared something striking at the Ondo Summit. Despite being down billions on paper, he’s not worried. And it’s not blind optimism—he’s looking at metrics that contradict the price action in ways that have historically preceded major market reversals.

Network Activity: The Hidden Signal Behind Rising Crypto Value

Here’s the thing that separates this downturn from previous crashes: In past crypto collapses, the networks themselves died. Users fled. Transaction volume plummeted. The ecosystem froze. Ghost town conditions were the norm.

Ethereum right now is doing the opposite.

Even with ETH trading at $1.97K (down significantly), something remarkable is happening on-chain:

• User engagement is climbing. Active wallet addresses are increasing, not declining. More people are using the network every single day, despite the price massacre.
• Daily activity is accelerating. Transactions, swaps, protocol interactions—all trending upward.
• Total Value Locked (TVL) is rising. Money sitting in Ethereum applications like Uniswap, Aave, and lending protocols is actually growing, not fleeing.

Think about what this means: The price is crashing while real network usage is expanding. This divergence rarely happens, and when it does, it historically corrects violently. The market eventually aligns with the fundamentals.

Tom’s observation cuts to the core: when price action disconnects this sharply from fundamental metrics, something has to give. Usually, it’s the price that catches up to reality.

From Speculation to Infrastructure: Why Crypto’s Long-Term Shift Matters

What’s actually changing beneath the surface is bigger than any single price swing. Tom describes it as crypto entering a “supercycle”—a transition from a speculative asset class into actual financial infrastructure.

This shift is already happening, though most people miss it while staring at red candles:

Real asset tokenization is accelerating. Major companies are moving stocks, bonds, credit instruments, and stable-value assets onto blockchains—primarily Ethereum. This isn’t retail trading; it’s institutional infrastructure building.

Stablecoin adoption is exploding. Businesses and individuals are using stablecoins for payments and transactions, not just speculation. This signals utility moving beyond trading.

Regulatory frameworks are finally supporting growth. Instead of just cracking down, governments are establishing clear rules that let crypto ecosystems operate legally. This legitimacy matters for institutional participation.

Tom’s thesis: Ethereum is becoming the foundational layer for tokenized finance. When that narrative fully clicks for the broader market, ETH’s performance relative to traditional assets like gold could be significant—but that realization takes time.

Current ETH price sits at $1.97K with 24h trading volume at $213.26M, while Bitcoin trades at $67.12K. These price levels, Tom suggests, don’t reflect the infrastructure developments happening simultaneously.

The Optics Problem: Vitalik’s Recent Activity Raises Questions

While Tom Lee defends Ethereum’s fundamentals and tells holders to stay focused on data, Vitalik Buterin recently sold approximately $5.12 million worth of ETH. The timing is… not ideal.

To be fair: Vitalik regularly sells ETH to fund projects, support developers, donate to charities, and finance Ethereum research. These sales aren’t necessarily bearish signals. He’s been doing this for years while Ethereum survived and evolved.

But optics matter, especially during a market selloff. When Ethereum’s creator is liquidating millions while retail holders watch portfolios bleed and analysts are preaching patience, it creates a disconnect. A “do as I say, not as I do” moment, even if the underlying rationale is different.

Vitalik probably isn’t panicked about Ethereum’s future. The sell felt opportune from his perspective. Still—it’s the kind of thing that sticks with investors during volatile periods.

The Investment Case: Ignoring Noise, Following Data

Tom’s message distills to this: Stop reacting to prices. Watch the actual network metrics.

The setup is unusual:

• Price declining sharply, but network usage rising
• Crypto transitioning from pure speculation to functioning infrastructure
• Institutional adoption accelerating quietly in the background
• Regulatory tailwinds beginning to materialize

If you believe Ethereum will become the backbone of tokenized finance (and increasing institutional involvement suggests many do), then current conditions are accumulation opportunities. If you don’t believe that thesis, then today’s price action confirms your bearish view—exit accordingly.

For those somewhere in the middle—bleeding, frustrated, but unconvinced it’s over—Tom’s take is straightforward: “The fundamentals are improving. The price will catch up eventually.”

The timeline? That could be 3 months or 3 years. That’s the bet you’re making.

The reality: Yes, this market is brutal. The pain is real. But underneath, Ethereum’s actual network strength is expanding rather than contracting. That’s the exception, not the norm in crypto crashes. If Tom Lee’s analysis is correct, this gap won’t persist indefinitely. The market will have to reconcile the divergence. When it does, the direction is more likely to favor the fundamentals than the price weakness.

So what’s your read—are improving fundamentals enough to weather the price action, or is this just another cycle?