David Hoffman, co-founder of Bankless, has sold his Ethereum (ETH) holdings. He argues that the “Ethereum is money” hypothesis has fully matured. The on-chain data and daily chart indicate that the market is already pricing its call.
Ether is trading at around $1,975, down 2.4% on the day and up about 14% over the past month. Active addresses go down, and exchange balances go up again. Both echo the fading described by Hoffman in his exit note.
Why did David Hoffman sell his ETH?
Hoffman described the “Ethereum is money” thesis as far-fetched. He said it takes each Ethereum layer to outperform competitors. According to him, this tape was missed.
The Bankless co-founder stresses that he remains bullish on the Ethereum network. However, he does not see any future structural reclassification of ETH as an asset. The protocol returns the value to L2s and applications instead of capturing it.
Its sale received widespread coverage across cryptocurrencies. Hoffman has been one of Ethereum’s loudest advocates over the past five years. The reaction divided the market. Some traders agree that this thesis has come to an end. Still others see ETH as a discount bet on Web3.
A decrease in active addresses confirms that demand on the network is fading
Daily active addresses on Ethereum have trended lower since early February, according to Santiment data. The metric peaked above 1.5 million in January. It now stands near 544,000.
This fading tracks the broader decline from $3,400 in early December to below $2,000 today. Hoffman argues that L1 assets are ultimately priced based on fees and revenues. Fees only flow as users continue to transact on the underlying layer.
In his country Exit noteHoffman pointed to Solana’s 2024 reclassification and NEAR’s 2026 move. Both showed that L1 token strength correlates with token market share. Ethereum lost this share during 2024 and 2025.
He also pointed to BNB and TRX, two of the most profitable chains. Their charts behave as ETH is expected to do after 2022. The bottom line is that fee dominance, not technology, sets the ceiling.
A trend reversal would weaken the signal. Addresses will need to get back above 1 million on a 30-day rolling average. Even then, the background on the series matches Hoffman bearish call.
Demand fades as activity migrates to the L2s. Those L2s pay almost nothing to the Ethereum base layer.
The exchange offer reverses, and sellers return after months of accumulation
The second sign on the chain cuts a more interesting shape. The supply of Ethereum on exchanges fell sharply in late January, from about 8.5 million to about 7 million. This low level continued through April. The stretch seemed like a quiet buildup.
However, this trend reversed in May. The supply on the exchanges rose again to 7.5 million. It is now stable at this level. Coins that return to exchanges usually indicate that holders are in a position to sell.
The rotation is small in absolute terms but significant in directional terms. This coincides with a collapse below the $2,140 level on the daily chart. It also interferes with renewable Downtrend in active addresses.
Hoffman argues that the bullish phases of the ETH chain eventually fade away. Architecturally, the network is a “giver, not a taker.” The exchange supply reversal in May is consistent with this view.
Equity holders who accumulated during the decline are now being distributed to areas of weakness. They are not waiting for structural reclassification.
The behavior is also consistent with the stablecoin point in Hoffman’s article. Ethereum is settling $163 billion in stablecoins today, up from $3 billion in 2020. This tool helps the dollar more than it helps ETH. The owners seem to be reading the same note.
Net exchange flows tend to lead to weak prices for several weeks. If the May trend continues into June, ETH could see new selling pressure even before the daily chart breaks. The Q1 backlog no longer carries the same weight.
ETH price prediction indicates channel floor at $1,920
The daily chart shows that Ethereum has been trapped inside a descending parallel channel since late April. The price was rejected from the 0.382 Fibonacci retracement level at $2,382 in early May. It then lost the 0.236 level at $2,140 in mid-May.
ETH is currently trading at $1,978 and heading towards the lower channel range. This area corresponds to the next visible support near $1920. A clean break below opens the way towards the $1,750 area, the previous swing low and the 0 Fibonacci anchor.
Trading volume has been declining since early February. A decline indicates weak conviction among both buyers and sellers. Meanwhile, the 14-day RSI is near 30 and entering the oversold zone.
Historically, a Relative Strength Index (RSI) reading below 30 on ETH has led to sharp counter-trend rallies. However, those highs are often reset before the broader trend resumes. Therefore, traders should watch for a wick to the $1,920 area followed by a daily reversal candle.
A setup that would flip the bullish bias is a daily close above $2,140. This move will retrace the 0.236 Fibonacci level and open a push through the $2,382 level. Until that happens, every rally fades into the down channel.
A bounce from the $1920 level on higher volume would buy time for the bulls. A close below will confirm the Hoffman structural reading on the tape. It would also put $1,750 on the table.
A retest of $1,750 would mark the lowest ETH print of 2026. It would also erase months of backlog by spot holders. The bulls need the $1920 area to hold cleanly to avoid this scenario.
Currently, the channel, the on-chain bar, and the Hoffman thesis form a consolidated bearish stack. None of these signals are critical on their own, but together they put pressure on the same trade. Buying ETH here is a bet that all three are rolled at once.
Watching the $2,140 retracement level is the cleanest way to test whether the bears or bulls are in control of the next move. Until this level is printed on the daily close, the burden of proof falls on the bulls, just as Hoffman’s “Why I Sold My ETH” note noted.
this post Was the Bankless founder right to sell his Ethereum? Reveal data on the chain appeared first on BeInCrypto.
