Ethereum Price Forecast: Tokenization and network activity skyrocket in Q1 despite DeFi contraction

Ethereum price today: $1,700

• Ethereum TVL, active loans and trading volume dropped alongside prices in Q1.
• Tokenization saw a notable shift, with tokenized commodities posting a 60% QoQ growth, spearheaded by Gold.
• ETH declines below a key ascending trendline as it eyes $1,524.

Following months of crashing prices and macro-driven fragility, Ethereum saw mixed performance across key metrics in the first quarter of 2026, according to Token Terminal.

In its quarterly Ethereum report, the onchain analytical platform highlighted contraction across DeFi-focused metrics such as lending, trading volume and fees, while tokenization and throughput expanded.

Total value locked (TVL), which measures capital deployed across the entire Ethereum ecosystem, dropped by 11% Quarter-over-Quarter (QoQ) — particularly due to heavy asset declines across the crypto market — but remains up by 22% on a YoY basis. Despite that, Ethereum remains the clear leader among top chains by total value locked at $316.2 billion, commanding a 71% gap over Tron, Solana, BNB Chain and Plasma combined, the report stated.

Token Terminal highlighted that active ecosystem loans on Ethereum averaged $21.8 billion in Q1, a 16.6% QoQ drop, spearheaded by a 24% decline in Aave's loan activity. Aave faced several notable departures in the quarter, including the exit of core protocol developers and contributors, the Aave Chan Initiative (ACI), BGD Labs and Chaos Labs. The drop doesn't affect Ethereum's lead in active loans, where it accounts for 79.2% of the top five chains in the sector.

However, Ethereum remains second-best in trading volume, the total worth of trades executed in decentralized spot exchanges, trailing the BNB Chain. The metric totaled $134.5 billion in Q1, a 24% QoQ drop and a 31.2% YoY decrease. Uniswap, Curve and CoW Swap accounted for a majority of the volume on Ethereum.

On the tokenization front, the market capitalization of tokenized assets held steady at $203.4 billion in Q1, down 0.7% QoQ but up 42.9% YoY. Stablecoins dominate the sector on Ethereum, accounting for 87.9% at $178.9 billion. Although that figure represents a 2.3% decline QoQ.

Tokenized funds grew to $19.4 billion, while tokenized commodities saw the largest expansion at $4.7 billion, 60% QoQ growth, almost entirely led by Gold. Ethereum accounts for 84% of tokenized commodities in the top five chains in the sector.

Commenting on the growth in tokenized assets on Ethereum, Etherealize noted that "institutions building tokenized finance are choosing Ethereum not out of ideology but because the liquidity, composability, and institutional precedent are already there."

"Every new tokenized asset deepens the liquidity that pulls in the next one, and a neutral substrate is the only equilibrium that holds because large players will never agree to settle on a competitor's infrastructure," Etherealize added.

Network activity skyrockets amid expanded throughput

The report highlighted an expansion in monthly active addresses on Ethereum, rising to a record average of 13.2 million in Q1, a 53.5% QoQ and 85.9% YoY growth. The record growth in active users translated into a rise in transaction counts, which totaled 200.4 million in Q1, up 38% QoQ and 81.5% YoY. Throughput also rose to a record high of 25.78 transactions per second, a 41.2% increase QoQ.

While network activity skyrocketed, fees dropped to 39.9 million in Q1, down 47.9% QoQ and 81.9% YoY, pushing average cost per transaction down following expanded data capacity from the Fusaka upgrade last December.

"This is Jevon's paradox at work, and we expect the increase in total network demand to more than make up for lower fees, similar to how the semiconductor industry generates several orders of magnitude more revenue today than it did in 1975, when Intel co-founder Gordon Moore observed that the number of transistors on a microchip doubled roughly every two years," Etherealize noted.

On the flip side, several reports earlier in the year attributed the surge in network activity to increased address poisoning due to the low-fee environment enabled by recent network upgrades.

Meanwhile, on the valuation side, ETH's fully diluted market cap fell to $290 billion in Q1, down 30.3% QoQ and 9.9% YoY. Despite the price decline, the ratio of staked ETH market cap to ETH's market cap climbed to 0.31 in Q1, up from 0.28 in the prior quarter.

Ethereum Price Forecast: ETH falls below ascending trendline support

On the daily chart, ETH continues to maintain a bearish near-term tone as it holds below the 20-, 50-  and 100-day Exponential Moving Averages (EMAs), clustered between roughly $1,784 and $2,100. The recent break below the former rising support trend line, now a barrier near $1,751, reinforces the notion of a market capped by overhead supply, while the Relative Strength Index (RSI) hovering around 38 suggests weak but stabilizing downside momentum rather than outright capitulation.​

On the topside, initial resistance emerges at $1,741, followed by the 20-day EMA near $1,784 and the horizontal cap at $1,806. Beyond that, sellers may reassert themselves at $1,909 and the 50-day EMA around $1,944. Further ahead is the $2,018/$2,108 resistance band and the 100-day EMA near $2,100.

On the downside, a clear break below the recent lows would expose the horizontal support at $1,524, with deeper cushions at $1,405 and then $1,156, where buyers would likely attempt to slow any further decline.

(The technical analysis of this story was written with the help of an AI tool.)