David Hoffman Sells ETH as On-Chain Demand Fades

Bankless co-founder David Hoffman sold his Ethereum holdings and explained the decision in a May 26 post and a longer note. He wrote that the “ETH is money” thesis has played out and said he no longer expects a structural rerating for ETH as an asset. He added he remains bullish on the Ethereum network but sees protocol value flowing to layer-2s and applications rather than being captured on the base layer.

On-chain metrics cited in Hoffman’s note show lower base-layer activity. Daily active Ethereum addresses peaked above 1.5 million in January and fell to about 544,000, according to Santiment data. Ether’s price declined from above $3,400 in early December to roughly $1,975 at the time of reporting.

Hoffman linked token strength for layer-1 networks to fee market share and pointed to migration of activity to layer-2 networks in 2024 and 2025 as a factor in reduced fee capture at the base layer.

Exchange balances of ETH moved lower from about 8.5 million in late January to roughly 7 million through April, a period that appeared consistent with accumulation. In May, exchange supply rose to about 7.5 million, a reversal Hoffman highlighted as holders returning coins to exchanges.

Hoffman also noted growth in stablecoin settlement on Ethereum, citing an increase to about $163 billion in recent measures from roughly $3 billion in 2020. He framed that growth as on-chain utility that benefits dollar settlement more than direct value accrual to ETH holders.

Technical indicators on the daily chart showed Ether inside a descending parallel channel since late April. Price was rejected near the 0.382 Fibonacci retracement at $2,382 in early May and broke the 0.236 level at $2,140 in mid-May. Ether traded around $1,975 and was moving toward the channel’s lower band near $1,920; a break below that level would put $1,750 into view. Volume has declined since early February and the 14-day RSI sat near 30.

Hoffman described his decision as pragmatic and wrote, “I built my career, community, and business on Ethereum, so the decision to sell deserves a deeper explanation.” The sale generated market attention and mixed reaction: some traders agreed with his assessment of the thesis, while others cited current prices as a bet on Web3 and layer-two adoption. Market participants note a daily close above $2,140 would change the technical bias toward higher levels, while continued exchange inflows and falling active addresses would align with the on-chain trends Hoffman referenced.