Ethereum 2026 outlook: staked, slightly inflationary, levered by scalability

Price prediction is arguably finance’s favorite sport – and in crypto, that fascination is amplified by the asset class’s growing mindshare as the industry steps into maturity and declines in volatility. While no one can predict the future with certainty, informed forecasts are grounded in a blend of quantitative analysis and qualitative judgment.

In the first weeks of the year, we’re launching our Price Predictions series, where we take a forward-looking view on the top five crypto assets. We begin this week with Bitcoin and Ethereum. For ETH, we must track: 

1. Monetary policy (issuance, burn, staking). 
2. Revenue taken away from Ethereum through scaling solutions. 
3. Exchange-traded fund (ETF) and institutional flows. 
4. Ethereum’s role as the dominant settlement and liquidity layer for stablecoins and tokenized debt. 

Price action is now driven less by the ultrasound money narrative that shaped ETH from 2021-2023 and more by ETF flows and whether real economic throughput on Ethereum can translate into sustainable, profitable consumer applications. This shift has accelerated over the past quarter as Ethereum’s position as the preferred venue for stablecoins and tokenized assets has further consolidated.

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What’s driving our 2026 outlook?

1. Monetary and Staking profile

A tight float persists, with roughly 28.5% of ETH staked, but net issuance has remained modestly positive during low-fee regimes. With the Fusaka software upgrade now live and fees structurally lower, ETH no longer benefits from automatic deflation, except during sustained activity spikes, benefiting from higher revenue.

As a result, staking yields rest primarily on consensus rewards and swap fees (MEV) rather than token burn, capping ETH’s bond-like appeal unless fee generation meaningfully rebounds. ETH increasingly behaves as a leveraged claim on ecosystem activity rather than a pure monetary asset.

2. Scaling solutions and fee economics

Ethereum’s scaling solutions, also known as Layer 2s (L2s), now process tens of billions in volume, but their growing efficiency means the network burns less ETH for every dollar transacted. New upgrades like Fusaka and PeerDAS lower transaction cost even more. This benefits users, but for ETH holders, it’s a mixed outcome; lower fees reduce ETH burn unless overall activity grows enough to compensate.

Current snapshots reinforce this tension, with ecosystem-level app fees far exceeding base-layer revenue, highlighting that throughput alone is insufficient to drive ETH valuation.

3. ETFs and institutional flows

Spot ETH ETFs remain large enough to matter, with assets under management around ~$18 billion, but recent flows confirm that direction dominates size. The ~$1.4 billion net outflow in November demonstrated how quickly ETH can re-rate when macro turns and fee/burn optics weaken, even with a low onchain supply.

4. Stablecoins, real-world assets, and Ethereum’s liquidity moat

By far, the most impressive development is Ethereum’s deepening role as the global liquidity hub for stablecoins and tokenized real-world assets (RWAs). Ethereum now hosts more than $160 billion in stablecoins, far exceeding any other chain, which makes it the dominant settlement layer for dollar-denominated onchain activity

This advantage has strengthened with recent launches of tokenized money market funds and T-bill products by major financial institutions, many of whom chose Ethereum as the primary issuance and settlement environment. 

• JPMorgan and Fidelity both deployed tokenized money market funds directly on Ethereum’s base blockchain, or Layer 1 (L1).
• BlackRock pioneered large-scale institutional tokenization on Ethereum with BUIDL. 
• Apollo launched its tokenized private-credit fund ACRED on Ethereum and its L2s.
• Amundi tokenized a EUR-denominated money market fund on Ethereum.
• BNY Mellon brought an AAA-rated CLO fund onchain via Ethereum.
• Baillie Gifford is launching a tokenized bond fund across Ethereum and its L2 ecosystem.

As tokenized assets scale from ~$25 billion towards over $100 billion, ETH becomes increasingly exposed to durable, organic financial flows, not just speculative trading activity. Finally, as these assets integrate directly with decentralized finance (DeFi) and collateral markets, they provide a credible pathway for higher fee-generation and structurally stickier capital supporting ETH’s valuation.   

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Our projected scenario range for 2026 

Price predictions are not single-point forecasts, but scenario-based assessments grounded in both quantitative data and qualitative assumptions. By modeling varying adoption, macroeconomic, and market-structure outcomes, we estimate potential valuation ranges at peak levels under each scenario over the course of the year.

• Base case - 3,400 - 3,700 - (13-23% projected YTD performance): With modest ETF inflows, neutral macro conditions, and scaling solutions growth failing to translate into higher fees, Ethereum could see little revenue impact and only modest upside. In this case, ETH would grind higher but remain capped by weak protocol revenue.
  
  
• Bull case - $3,900 - 4,200 (30-40% projected YTD performance): This scenario would be supported by accelerating L2 economic activity, a rebound in ETH burn (or the introduction of structural mechanisms that better align L2 value accrual with mainnet economics, such as a fixed interlayer tax), and a resumption of ETF inflows as ETH is increasingly positioned as both yield-bearing capital and core infrastructure for real-world assets to move onchain.
  
  At the same time, mainnet application development shows signs of re-acceleration, with Ethereum hosting the highest number of newly deployed applications over the past three years, underscoring early evidence of renewed ecosystem momentum.
  
  In parallel, a Federal Reserve easing cycle would improve ETH’s relative carry. With staking yields near ~3% versus the US 10-year at ~4.2% today, a move toward ~3.5% under a 75 bps rate-cut scenario would flip the spread positive, creating a staking arbitrage that could catalyze institutional reallocation into ETH.
  
  
• Bear case - $1,700 - 2,200 (-43% to -26% projected YTD performance): Ethereum could be dragged to this bear case scenario due to prolonged risk-off environment, continued revenue compression, another ETF outflow wave, and modestly inflationary supply overwhelming weak flows despite ecosystem growth.
  

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What are the key risks?

• Revenue loss to scaling solutions: Continued fee reduction and the migration of execution to scaling solutions may cap ETH burn and protocol-level revenues, reinforcing a scenario in which ecosystem growth fails to translate into meaningful value accrual for ETH holders in the absence of improved L2 fee routing or alignment mechanisms.
  
  
• ETF flow reflexivity: As with Bitcoin, ETH spot ETFs introduce flow-driven volatility. Sustained risk-off conditions or macro shocks could trigger mechanical outflows, amplifying drawdowns regardless of onchain fundamentals or staking participation.
  
  
• Modestly inflationary regime: With fees structurally lower post-Fusaka, ETH may remain net inflationary for extended periods. If fee generation fails to scale with activity, issuance could become a persistent valuation headwind rather than a neutral factor.
  
  
• Yield competition from traditional finance: If US real rates remain elevated, ETH staking yields may struggle to compete on a risk-adjusted basis, limiting institutional reallocation into ETH even as onchain activity and RWAs grow.
  
  
• RWA and stablecoin concentration risk: While Ethereum dominates stablecoin and tokenized cash issuance, this creates exposure to regulatory, issuer, or adoption shocks. Slower-than-expected RWA scaling or adverse policy developments could weaken one of ETH’s most important emerging demand drivers.

Ethereum’s 2026 outlook ultimately hinges on monetization rather than adoption 

Real economic activity on the network, particularly stablecoin settlement, tokenized cash, and institutional RWAs, is scaling, but fee compression, L2 value leakage, and modest net issuance raise the bar for throughput to translate into durable protocol-level economics. ETH is no longer a pure monetary asset and is increasingly a leveraged claim on Ethereum’s ability to convert liquidity dominance and institutional relevance into sustainable cash flows.

A meaningful re-rating requires visible progress in value capture, whether through higher aggregate fees, improved alignment between L2s and mainnet, or supportive flow regimes driven by ETFs and yield differentials. Without this, Ethereum may continue to anchor the onchain financial system while offering more limited upside for the asset itself.