Arthur Hayes Calls Ethereum (ETH) Deeply Undervalued, Sees 3x-5x Rally

Hayes and Lee, Same Verdict

Two of the most closely followed theorists in digital assets delivered the same verdict this week: Ethereum fundamentals guide says the market is mispricing the asset. Arthur Hayes, the crypto investor who now runs the firm Melstrom, and Bitmine chairman Tom Lee both argued that Ethereum (ETH) is severely undervalued and set to lead the next stage of the virtual asset cycle — though they reach that conclusion through very different mechanics. Hayes named Ethereum his first destination for new capital, noting it is the only megacap crypto asset that never reclaimed its 2021 peak. That neglect, in his view, is exactly what fuels a coming “hate rally”: when the Bitcoin cycle turns upward, pent-up chasing demand should flood into the network he describes as the core DeFi Layer-1 with the largest developer base, producing a 3x-5x move over a short horizon. Lee frames the asset as the future settlement layer of global finance rather than a fee-capture play. He projects a tokenization supercycle in which $150 trillion to $500 trillion of equities, bonds and real estate move on-chain over five years, with Ethereum at the center. He also sees the emerging AI-agent economy relying on the network's smart contracts and fast finality for machine-to-machine micropayments. On ratios, Lee argues ETH/BTC, now around 0.03, can reclaim its former 0.08 high and push beyond 0.25 — meaning at least $6,000 per ETH if Bitcoin reaches $150,000. Backing the thesis with balance-sheet action, Bitmine has run its Ethereum treasury strategy for 65 consecutive weeks of buying, amassing over $14 billion in ETH on the way to a stated 5%-of-supply target, while institutional demand builds through spot ETH ETF inflows and on-chain activity such as the record daily DEX volume logged by Robinhood Chain.

$7.5M Drained From Sandwich Bot

While the bulls make their macro case, on-chain data keeps exposing the network's invisible plumbing — and one of its most notorious operators just got a taste of his own medicine. Tracking tools that log every ETH inflow to the main contract run by Jaredfromsubway.eth, the most active sandwich operator on Ethereum, show cumulative takings of 117,007 ETH — roughly $295 million at current prices — since March 2023. Sandwiching is a purely ordering-based extraction: the bot watches the public mempool for a large pending swap, buys ahead of it by paying a higher gas fee, lets the victim execute at a worse price, then sells instantly into the move. The victim's slippage tolerance is the bot's profit margin — no exploit, no bug, thousands of times a day. In June the script flipped. An unidentified attacker deployed 66 fake token contracts wearing the familiar names of WETH, USDC and USDT, targeting the bot itself rather than retail wallets. The bot's automated arbitrage logic dutifully scanned the fakes and granted token spend approvals to the attacker's malicious contract; once enough approvals piled up, a series of coordinated transactions drained at least $7.5 million in ETH and stablecoins, later laundered through Tornado Cash. The funds remain unrecovered. The deeper structure is also concentrated: a relayscan.io snapshot shows ultrasound relay carrying 34.0% of the 24-hour MEV-Boost load, Titan 28.5% and bloXroute 25.0% — three relays forwarding roughly 85% to 88% of all MEV-Boost blocks — while Titan's in-house builder alone assembled 50.3% of blocks, with Quasar and Buildernet near 16% each. Since Ethereum's proof-of-stake transition, more than 90% of Ethereum validators outsource block building through this auction. The silver lining: a dataset of more than 95,000 sandwich attacks shows monthly sandwich profits fell from about $10 million in late 2024 to roughly $2.5 million by October 2025 — a 75% decline in under a year — as MEV-protection tools and private order flow compress the strategy, which analysts estimate cost victims around $60 million annually at its peak. Readers tracking the market in real time can follow live spot and futures prices on Binance.

Glamsterdam ePBS in Focus

COINOTAG's read is that both threads point the same direction. A network whose extraction layer is measurably shrinking — verified by the on-chain inflow record of the bot's own contract and the attack dataset above — is structurally healthier than its loudest critics claim, which underpins the undervaluation case from Hayes and Lee. The planned ePBS module in the Glamsterdam upgrade would move the off-chain relay auction into consensus rules itself, removing trusted middlemen and giving validators cryptographic guarantees about block contents. Until that ships, ordering uncertainty lingers — but the trajectory favors Ethereum's base-layer economics.