Episode Summary
Executive Summary: The episode examines ETH’s post-2021 underperformance, arguing it was heavily shaped by Ethereum’s L2-centric roadmap, which improved the network but reduced near-term value capture for ETH. Mike Nado sees ETH in or near fair value, not deep value, with cycle metrics implying a possible bottom but not certainty. He remains neutral-to-bullish, but says ETH must prove it can regain stronger fundamentals and outperform Bitcoin.
Main Topics: ETH’s diminishing cycle returns (Priority: 5/5): Ryan and Mike compare ETH’s three major market cycles, noting sharp decline in gains from 175x in 2017 to 61x in 2021 to 5.6x in the most recent cycle, raising the question of whether ETH has permanently changed or merely skipped a cycle. L2 roadmap and value capture tradeoff (Priority: 5/5): Mike argues Ethereum’s scaling strategy improved the product and user experience but disrupted ETH’s short-term economics by shifting activity and fee capture away from L1, contributing to market disappointment. How to value ETH (Priority: 5/5): The conversation contrasts ETH as a monetary/store-of-value asset, a cash-flowing network asset, and a network/economy asset with stablecoins and TVL, highlighting the huge spread in fair value estimates. On-chain fundamentals and revenue decline (Priority: 4/5): They discuss falling L1 revenue, reduced staking yield composition, and the impact of blobs and L2s. Mike says fee collapse does not fully invalidate ETH’s value because token economics and network base remain strong. Cycle indicators and fair value zone (Priority: 5/5): Mike reviews MVRV, supply in profit, ETH/BTC ratio, and 200-week moving average data, concluding ETH is close to prior bear-market lows and likely in fair value territory, though not necessarily deep value. Stablecoins and ecosystem strength (Priority: 4/5): ETH’s stablecoin dominance is presented as a bullish structural signal: Ethereum holds the bulk of crypto stablecoin supply, and future TradFi stablecoin issuance could further strengthen the chain’s base layer value. Portfolio implications and re-underwriting ETH (Priority: 4/5): Mike explains ETH needs to prove itself against alternative crypto assets in the next cycle; he is considering whether ETH can outperform Bitcoin again before adding more capital.
Key Arguments: ETH’s price performance has decelerated sharply across cycles, but the chart still shows a rising base and possible holder-base rotation rather than complete structural failure. Ethereum’s L2 roadmap likely reduced ETH’s short-term value capture by lowering L1 fees and making the network cheaper to use, which is good for adoption but bad for ETH’s near-term monetization. The market has not settled on a single ETH valuation framework; it is still uncertain whether ETH should be priced like a store-of-value asset, a tech stock, or a network economy token. Fees alone do not capture ETH’s full value because the network can still be strong even with low revenue, low inflation, and high stablecoin/TVL presence. ETH’s token economics remain relatively strong: issuance is low enough that ETH can still function as a store-of-value-like asset despite reduced fee revenue. Cycle indicators suggest ETH is close to prior bear-market bottoms, with several metrics already in or near historical low zones. ETH may have bottomed before Bitcoin in the current cycle, but Mike says a deeper drawdown remains possible if macro conditions worsen. To earn a place in the portfolio, ETH must not only be fairly valued but also present a higher probability of outperforming Bitcoin than competing assets.
Data Points: ETH cycle 1 gain: 175x - From late-2016 trough around $8 to January 2018 peak around $1,400 ETH cycle 2 gain: 61x - From December 2018 trough around $80 to November 2021 peak around $4,878 Most recent cycle gain: 5.6x - From June 2022 trough around $881 to 2025 peak around $4,953 ETH current price: ~$2,000 - Price level discussed at the start of the episode as ETH hovers above $2K ETH market cap: ~$250 billion - Used in valuation discussion of ETH versus stablecoin supply and TVL Ethereum stablecoin supply: ~$180 billion - Mike cites this as a major fundamental base on Ethereum ETH stablecoin dominance: ~60% of total stablecoin supply - Referenced as a bullish structural position for Ethereum USDT share on Ethereum: 53.6% - Most popular stablecoin on Ethereum by supply ETH inflation / issuance: ~0.83% annually - Mike says current annualized issuance is around this level Current staking yield composition: ~90% issuance - Most staking yield is now coming from issuance rather than fees/MEV MVRV: 0.84 - ETH cycle metric indicating the asset is near historical bear-market territory ETH MVRV low in prior bear: 0.7 - The last bear-market low referenced for ETH Percent supply in profit: 39.4% - Shows how much of ETH supply is currently underwater ETH/BTC cycle low timing: April 2025 - Mike says ETH/BTC established its cycle low then, unusually earlier than some other ETH metrics 200-week moving average: Current price below 200W MA - ETH is currently below the 200-week moving average, similar to prior cycle lows Deep value reference level: ~$1,700 or below - Ryan and Mike discuss this as a rough zone where ETH could become deep value Bear-market duration estimate: ~1 year - Mike’s historical base case for how long bear markets take to play out
Pivotal Quotes: "ETH has to prove itself to me." — Mike Nado: Mike’s stance on whether ETH deserves continued inclusion in his portfolio this cycle "Ethereum sort of disrupted itself, right, so that it could grow and so that we could scale via these L2s." — Mike Nado: Explaining why the L2 roadmap may have hurt ETH’s short-term value capture "I think the way to think about L1s is like as nation states, and a token is the currency." — Mike Nado: Describing his preferred valuation framework for Ethereum and other L1s
Implications: ETH appears structurally stronger than its price suggests, but its valuation case is still unsettled. Investors should watch whether L1 scaling, stablecoin growth, and clearer regulation restore value capture and help ETH outperform Bitcoin again.