Ether’s Declining Appeal as an Investment
A Crypto Venture Capitalist’s Perspective
Ether’s (ETH) declining appeal as an investment comes from layer-2s draining value from the main network and a lack of community pushback on excessive token creation, a crypto venture capitalist says.
Nic Carter, a partner at Castle Island Ventures, stated that the number one cause of this is “greedy Eth L2s siphoning value from the L1 and the social consensus that excess token creation was A-OK.” He added that ETH was “buried in an avalanche of its own tokens. Died by its own hand.”
Ethereum’s Decline
Ethereum is down 17.94% over the past 30 days, according to CoinMarketCap data. The ETH/BTC ratio, which shows Ether’s relative strength compared to Bitcoin (BTC), is sitting at 0.02260, its lowest level in nearly five years, according to TradingView data.
At the time of publication, Ether is trading at $1,894, down 5.34% over the past seven days, according to CoinMarketCap data.
Fee Revenue Collapse
Cointelegraph Magazine reported in September 2024 that fee revenue for Ethereum had “collapsed” by 99% over the previous six months as “extractive L2s” absorbed all the users, transactions, and fee revenue while contributing nothing to the base layer.
Layer-2 Networks and the Future of Ethereum
Cinneamhain Ventures partner Adam Cochran said that Based Rollups could solve the issue of Ethereum’s layer-2 networks pulling liquidity and revenue from the blockchain’s base layer.
Cochran stated that Based Rollups could “directly impact the monetization of Ethereum by making a pretty fundamental change to incentive structures.”
Optimism and Pessimism
Despite optimism towards the end of last year about Ether reaching $10,000 in 2025, the same month Bitcoin touched $100,000 for the first time, it has since seen a sharp decline alongside the broader crypto market downturn.
Standard Chartered added to the bearish outlook via a March 17 client letter, which revised down their end of 2025 ETH price estimate from $10,000 to $4,000, a 60% reduction.
Bullish Outlook
However, several crypto traders, including pseudonymous traders Doctor Profit and Merlijn The Trader, are “insanely bullish” and argue that Ether could be the “best opportunity in the market.”
Despite the bearish outlook, several experts remain optimistic about the future of Ethereum.
Conclusion
Ether’s declining appeal as an investment is attributed to layer-2s draining value from the main network and a lack of community pushback on excessive token creation. The collapse of fee revenue and the potential for Based Rollups to solve the issue of layer-2 networks pulling liquidity and revenue from the base layer are key factors in understanding the current state of Ethereum. While some remain optimistic about the future of Ethereum, others are bearish, predicting a decline in the price of Ether.
FAQs
- What is the current price of Ether? $1,894
- What is the current ETH/BTC ratio? 0.02260, its lowest level in nearly five years
- What is the current 30-day price change of Ether? -17.94%
- What is the current 7-day price change of Ether? -5.34%
- What is the estimated end-of-2025 price of Ether according to Standard Chartered? $4,000, a 60% reduction from the original estimate of $10,000
