Is Ethereum Overvalued, Similar ‘To Meme Coins Like Shiba Inu’?

A crypto investor, Fred Krueger, thinks Ethereum is overvalued at spot charges. Referring to X, Krueger added that  Ethereum supporters are “detached from reality” after ETH, the native forex, not too long ago broke above $3,000.

The investor pointed to the final declining on-chain exercise, fierce competitors from alternate options like Solana and Avalanche, as an illustration, and regulatory uncertainty that makes holding the coin dangerous.

Ethereum Is Sluggish And Utilization Is Shrinking

Krueger argues that Ethereum’s on-chain transactions may very well be quicker and cheaper. Within the present panorama marked with scalable and low-fee alternate options, both constructed on Ethereum or current as unbiased chains, the chain’s challenges not justify ETH buying and selling at spot charges of about $3,000. 

Past scaling and throughput challenges, the investor additionally refers back to the sharp decline in each day energetic customers (DAUs) on the mainnet. Since 2021, Ethereum and altcoin costs have peaked, and energetic DAUs have fallen from round 120,000 to roughly 66,000 in February 2024. 

Ethereum DAU falling | Supply: Fred Krueger on X

Although community supporters stated there had been developments like layer-2 platforms like Arbitrum pinning their safety on Ethereum, Krueger notes that even essentially the most energetic and largest protocols by complete worth locked (TVL) have seen person losses.

As an instance, Uniswap V3, the third model of one in every of Ethereum’s largest decentralized exchanges, Uniswap, now data round 16,000 each day energetic customers, considerably decrease than earlier years.

Options Like Solana Provide Higher: Is ETH Costly?

The investor argues that the decline in DAUs, pointing to energetic utilization, sharply contrasts with Ethereum’s rising market capitalization and spot charges. In Krueger’s opinion, this rising state of affairs is why Ethereum has turn out to be a bloated “meme coin like Shiba Inu,” its excessive market cap.

It within the investor’s evaluation that quicker and cheaper alternate options like Solana, Avalanche, and Close to Protocol provide higher worth for particular use instances like decentralized finance (DeFi) and video games. 

Krueger additionally took concern with the dearth of regulatory readability on Ethereum. America Securities and Alternate Fee (SEC) not too long ago authorized the primary spot Bitcoin exchange-traded funds (ETF) batch. Primarily, it’s because SEC officers acknowledge Bitcoin as a commodity.

Gary Gensler and the SEC have did not classify ETH in the identical class as BTC. Accordingly, although the broader crypto neighborhood is optimistic in regards to the eventual authorization of a spot Ethereum ETF, Krueger thinks it’s unlikely.

Ethereum price trending upward on the daily chart | Source: ETHUSDT on Binance, TradingView
Ethereum value trending upward on the each day chart | Supply: ETHUSDT on Binance, TradingView

Nonetheless, time will solely inform how Ethereum and its market valuation will evolve within the coming months. Supporters are optimistic, regardless of criticism, that rising adoption and ETH’s deflationary nature will raise costs in the direction of 2021 highs of $5,000.

Characteristic picture from DALLE, chart from TradingView

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