The recent surge in the price of Ethereum (ETH) to over $3,000 has sparked excitement within the crypto community. However, amidst the celebrations, renowned Bitcoin ETF expert Fred Krueger has raised skepticism about the current valuation of ETH. Krueger, a Wall Street veteran and prop trader, took to social media to express his concerns, stating that “ETH is completely detached from reality.”
Krueger highlighted a concerning trend in the usage of the Ethereum blockchain despite its high market cap. He pointed out that the number of active daily users on the platform has declined significantly, dropping from 120K in 2021 to just 66K over the last year. The top app, Uniswap V3, is only attracting 16K daily active users, a stark contrast to the numbers seen in 2020.
Comparison to Meme Coins
Drawing parallels to meme coins like Shiba Inu, Krueger criticized Ethereum’s valuation, noting that its market cap of $361 billion is inflated given the decrease in active users. He referred to Ethereum as becoming a type of meme coin, emphasizing the disconnect between its market cap and actual utility.
Krueger also highlighted the competitive landscape for Ethereum, pointing out that other blockchains outperform it in terms of transaction costs and speed. He mentioned Solana, Avalanche, and Near as examples of blockchains that offer better performance for specific use cases like gaming and DeFi applications.
Expressing skepticism about the future regulatory environment for Ethereum, Krueger questioned the likelihood of an ETH exchange-traded fund (ETF) being approved. He raised concerns about potential regulatory hurdles under the leadership of Gary Gensler, suggesting that an ETH ETF might not be welcomed by the SEC chairman.
In response to Krueger’s criticism, members of the crypto community provided mixed reactions. Some challenged his analysis by pointing to Ethereum’s roadmap focused on rollups and the misleading nature of using mainnet daily active users as a metric for platform health. However, Krueger remained unconvinced, emphasizing his doubts about the long-term sustainability of Ethereum.
Krueger’s critique extended beyond Ethereum to the broader landscape of cryptocurrencies, questioning the value proposition of altcoins and Layer 1 solutions compared to Bitcoin. He argued that these platforms are unlikely to become significant value generators in the long term, emphasizing his belief in Bitcoin as the revolutionary cryptocurrency.
Krueger’s overall stance on Ethereum and the broader crypto market emphasizes his belief in Bitcoin as the primary revolutionary currency. He sees other cryptocurrencies as fighting for smaller use cases and lacking the unique value proposition of Bitcoin. Despite the recent price surge, Krueger’s critical analysis raises important questions about the long-term viability and valuation of Ethereum. Investors are advised to conduct their own research and consider the risks involved in the crypto market before making any investment decisions.
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