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Home»ETHEREUM NEWS»Ethereum hits $3000 but is ‘out of touch with reality’: expert
ETHEREUM NEWS

Ethereum hits $3000 but is ‘out of touch with reality’: expert

By Crypto FlexsFebruary 21, 20244 Mins Read
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Ethereum hits 00 but is ‘out of touch with reality’: expert
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Ethereum (ETH) price yesterday surpassed the $3,000 threshold for the first time since April 2022. However, amidst the celebratory fireworks of the cryptocurrency community, renowned Bitcoin ETF expert Fred Krueger expressed a starkly contrasting opinion. Kruger, a Wall Street veteran and prop trader, took to

Why Ethereum is “completely out of touch with reality”

Krueger’s comments come at a time when the cryptocurrency market is witnessing a resurgence of investor interest, with Ethereum leading the pack following recent price gains. Nonetheless, Krueger points out a worrying trend in the use of the Ethereum blockchain.

ETH is completely out of touch with reality. Deep dive.
————————————————

ETH is $3,000. Clearly, this means that a large number of people are using ETH and this number continues to grow. Yes?

no.

Eth, the chain dropped at 120K… pic.twitter.com/141GwtB0yz

— Fred Krueger (@dotkrueger) February 21, 2024

“ETH is $3,000. Obviously, this means that a lot of people are using ETH. Yes? no. Eth, the number of daily active users on the chain fell from 120,000 in 2021 to 66,000 last year. The best app, Uniswap V3, has just 16,000 DAU. “I remember in 2020 this number was over 60,000,” he said, emphasizing that the direct usability and engagement of the platform was declining.

Bitcoin ETF experts further criticized Ethereum’s valuation, saying it was similar to meme coins like Shiba Inu, which has an inflated market capitalization of $361 billion despite a decline in active users. “This has really become a kind of meme coin, similar to Shiba Inu,” Krueger said, noting the sharp contrast between Ethereum’s high market capitalization and declining direct usage.

Kruger argues that Ethereum is not only overvalued, but also faces stiff competition from other blockchains that outperform Ethereum in terms of transaction costs and speed. “It’s not particularly cheap ($1.50 per transaction) or fast. If you’re only interested in reward points for games or casino-style DeFi apps (Solana, Avalanche, Near, etc.), you’ll love them all.”

Kruger also expressed skepticism about Ethereum’s future regulatory environment, particularly the potential of the ETH exchange-traded fund (ETF). “Finally, I don’t think Gensler will allow an ETH ETF… I don’t think Gary wants to make his second ETF massively pre-mined. It sets a very bad precedent,” he said, recalling the difficulties Ethereum faced in gaining mainstream financial acceptance.

Reaction from the cryptocurrency community

Krueger’s critical views were met with mixed reactions from X’s cryptocurrency community. One user challenged Krueger’s analysis by pointing out the misleading nature of Ethereum’s rollup-centric roadmap and use of mainnet daily active users (DAU) as an indicator of platform health. But Krueger says, “Even L2s like Arbitrum have seen declines over the past 12 months. Not all is well in the ETH space.”

Another user highlighted the cyclical nature of DeFi and the broader cryptocurrency market, suggesting that the current recession is a temporary phase of risk aversion. However, Kruger dismissed these claims, reiterating the lack of interest in speculative DeFi activity and emphasizing his belief that Bitcoin is a truly revolutionary cryptocurrency. “I’m not interested in Degen Monkey games. Have fun,” he said.

Kruger’s criticism extends beyond Ethereum to the broader cryptocurrency landscape, questioning the long-term viability and value proposition of altcoins, including layer 1 solutions other than Bitcoin. He argues that these platforms are unlikely to be significant value creators in the long term. This is because the control mechanism is likened to fiat currency, but instead of a traditional central banker there is a central figure like Vitalik Buterin.

Kruger’s overall stance on Ethereum and the broader cryptocurrency market is clear. “My stance on ETH. After all, Bitcoin is a revolution… “All other cryptocurrencies are fighting for much smaller use cases,” he explained, emphasizing his belief in Bitcoin’s unique value proposition as a decentralized and finite monetary system.

At press time, ETH price was trading at $2,935, above the 0.5 Fibonacci retracement level ($2,922). A weekly close above this threshold could confirm another rise in the price of ETH.

ETH price breaks above 0.5 Fib, 1-day chart | Source: ETHUSD on TradingView.com

Featured image created with DALL·E, TradingView.com chart

Disclaimer: This article is provided for educational purposes only. This does not represent NewsBTC’s opinion on whether to buy, sell or hold any investment, and of course investing carries risks. We recommend that you do your own research before making any investment decisions. Your use of the information provided on this website is entirely at your own risk.

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