Key Points

  • Down nearly 19% for the year, Ethereum remains the top player in decentralized finance (DeFi).
  • Growth in important DeFi areas such as stablecoins or asset tokenization could help to push Ethereum much higher in 2027.
  • During the first DeFi boom (2020-2021), Ethereum was a standout performer.

In what has generally been a bearish market for crypto this year, there have been some notable standouts. Hyperliquid (HYPE -3.33%) has skyrocketed by more than 225%, and Zcash (ZEC +2.85%) has soared by 150%. Based on this recent performance, they now both rank among the top 10 cryptocurrencies in the world in terms of market cap.

But I'm not expecting an encore performance from either of them next year. The crypto market is filled with one-hit wonders that soar in price one year, only to nosedive the next. Instead, the surprise winner of 2027 will be Ethereum (ETH +4.16%), and here's why.

The bullish case for Ethereum

Admittedly, the setup for Ethereum looks dicey right now. It's down 19% for the year, and is now trading 51% below its all-time high of $4,954 from August 2025. Somehow, Ethereum lost its mojo, and hasn't been able to regain it.

Image source: Getty Images.

But let's step back and take a big picture view here. Ethereum is still the premier Layer 1 blockchain network in the world, and it's not even close. Ethereum's dominance is especially notable in decentralized finance (DeFi). Based on total value locked (TVL), a key metric for measuring DeFi strength, Ethereum has a commanding 53% market share of DeFi. The next closest blockchain has a market share of just 7%.

Even better, Ethereum is at the forefront of two important trends driving future growth in DeFi: stablecoins and real-world asset (RWA) tokenization, in which ownership rights of things like stocks and bonds are transformed into tradeable crypto. These two trends have been embraced by major Wall Street banks and financial institutions. Thus, Ethereum has a very clear path to institutional adoption. If banks and financial institutions are going to move aggressively into stablecoins or tokenization, they are likely going to be working with the Ethereum blockchain.

The bearish case for Ethereum

There also are reasons to be concerned about Ethereum. For one, spot Ethereum exchange-traded fund (ETF) outflows show no signs of slowing. As long as money is leaving these investment funds, it will be difficult for Ethereum to march higher.

At the same time, Ethereum treasury companies appear to be stepping back from their plans to buy and hoard Ether coins. That, too, could put downward pressure on the price of Ethereum.

And, finally, Congressional lawmakers have lost the plot when it comes to passing comprehensive new crypto legislation. Passage of the Clarity Act was supposed to be a slam dunk earlier this year, but it fizzled due to political infighting and pushback from key players in traditional finance.

Combined, these factors help to explain why Ethereum has been trending lower for the past 12 months.

The historical template from 2020 and 2021

If history is any guide, Ethereum could soon skyrocket in value. I'm particularly looking at the period from 2020 to 2021, when Ethereum suddenly recovered from major losses to become one of the top-performing cryptocurrencies in the world.

ETH - Ethereum

CRYPTO · As of 4:44 AM ET 11/05/26

Key data points

In 2020, Ethereum rallied by 472%. The following year, it soared by 395%. By way of comparison, Bitcoin (BTC +2.45%) also gained during that time period, but nowhere near as much as Ethereum. Bitcoin soared by 304% in 2020 and 59% in 2021.

No surprises here, but this stunning outperformance of Ethereum in 2020-21 coincided with the first DeFi boom. At the time, many crypto insiders predicted the demise of traditional finance, and its replacement by blockchain finance. Ethereum, as the clear DeFi leader, saw some of the biggest gains.

Will history repeat? Perhaps. If it does, then Ethereum could make a major comeback in 2027. Hyperliquid and Zcash may continue to rise in price, but I'm predicting that Ethereum will far surpass anything they can achieve.

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