- Following Trump’s re-election, Bitcoin reached a new all-time high, while Ethereum remains 68% below its 2021 ATH.
- Lekker Capital CIO Quinn Thompson calls ETH a “dead investment” citing declining transaction activity, user growth and fees.
- The crypto community is divided on whether Layer-2 growth benefits the ETH token or if value primarily accrues to other tokens.
- Despite upcoming Pectra upgrades and solid ETF inflows of US$4 billion, BlackRock believes ETH ETFs with staking capabilities would generate significantly more interest.
While Bitcoin made a new all-time high (ATH) following Donald Trump’s re-election, the second-largest crypto by market cap, Ethereum, hasn’t shared the same fate.
Ether still hasn’t reached its high from November 2021, when it was trading for US$4,891.70 (approximately AU$7,794.11 in today’s money). This represents a hefty 68% discount, given that ETH trades now for just US$1,803.75 (AU$2,873.81).
Unfortunately for Ether-holders, even today’s price may be too high. Sure, Ethereum has use cases and utility; but it’s not a good investment, says Quinn Thompson, CIO of hedge fund Lekker Capital.
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In a post on Crypto Twitter, Thompson said that “there is no investment case” for Ethereum, citing a lack of activity, user numbers and network fees.
Make no mistake, ETH as an investment is completely dead. A $225 billion market cap network that is seeing declines in transaction activity, user growth and fees/revenues.
Quinn Thompson, CIO Lekker CapitalThe Lekker CIO argues that there is no reason to believe in Ethereum from an investment perspective, though it still has a use case as a blockchain.
As a network with utility? Yes. As an investment? Absolutely not.
Quinn Thompson, CIO Lekker CapitalWhen one user on CT argued that the “entire Ethereum ecosystem” is growing, not just the main Ether blockchain, Thompson countered by saying that there is a difference in what the entire ecosystem does and what the value of ETH is.
The vast majority of value from the referenced ecosystem growth is accruing to other tokens and entities.
Quinn Thompson, CIO Lekker CapitalOthers pointed out that once the ecosystem grows, ETH actually benefits from fees, as other blockchains use it as a gas token.
Upgrades Looming, as ETFs Wait for Staking Features
Meanwhile, Ethereum is entering its final test phase for the Pectra upgrade. This comes as earlier efforts with the Holesky and Sepolia upgrades had failed.
Despite these trying times for Ethereum, there is a silver lining. While the start of the US spot Ethereum exchange-traded funds (ETFs) has been underwhelming compared to the Bitcoin ETFs, they still hold up quite well in the history of ETFs.
BlackRock’s head of digital assets, Robbie Mitchnick, said that there have only been a few ETFs that have seen more than US$4 billion (AU$6.36 billion) in inflows within six months.
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Mitchnick believes the ETFs would have even done better if they had ETH staking as a feature. And while it won’t be easy to introduce staking to the ETFs, once done it will be “a step change upward” for interest in Ether ETFs, he added.
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