Greedy L2s are the reason ETH is a 'completely dead' investment: VC

Ether’s (ETH) declining attraction as an funding comes from layer-2’s draining worth from the primary community and an absence of group pushback on extreme token creation, a crypto enterprise capitalist says.

“The #1 reason behind that is grasping Eth L2s siphoning worth from the L1 and the social consensus that extra token creation was A-OK,” Fort Island Ventures companion Nic Carter mentioned in a March 28 X publish.

Ether “died by its personal hand”

“ETH was buried in an avalanche of its personal tokens. Died by its personal hand,” Carter mentioned. He mentioned this in response to Lekker Capital founder Quinn Thompson’s declare that Ether is “utterly useless” as an funding.

Cryptocurrencies — *Supply:* *Quinn Thompson*

“A $225 billion market cap community that’s seeing declines in transaction exercise, consumer development and charges/revenues. There is no such thing as a funding case right here. As a community with utility? Sure. As an funding? Completely not,” Thompson mentioned in a March 28 X publish.

The ETH/BTC ratio — which exhibits Ether’s relative power in comparison with Bitcoin (BTC) — is sitting at 0.02260, its lowest degree in almost 5 years, in keeping with TradingView information.

On the time of publication, Ether is buying and selling at $1,894, down 5.34% over the previous seven days, in keeping with CoinMarketCap information.

In the meantime, Cointelegraph Journal reported in September 2024 that charge income for Ethereum had “collapsed” by 99% over the earlier six months as “extractive L2s” absorbed all of the customers, transactions and charge income whereas contributing nothing to the bottom layer.

Across the similar time, Cinneamhain Ventures companion Adam Cochran mentioned Based mostly Rollups might remedy the problem of Ethereum’s layer-2 networks pulling liquidity and income from the blockchain’s base layer.

Cochran mentioned Based mostly Rollups might “instantly impression the monetization of Ethereum by making a reasonably basic change to incentive buildings.”

Associated: Ethereum futures premium hits 1+ yr low — Is it time to purchase the ETH backside?

Regardless of optimism towards the top of final yr about Ether reaching $10,000 in 2025 — particularly after reaching $4,000 in December, the identical month Bitcoin touched $100,000 for the primary time — it has since seen a pointy decline alongside the broader crypto market downturn.

Commonplace Chartered added to the bearish outlook by way of a March 17 shopper letter, which revised down their finish of 2025 ETH value estimate from $10,000 to $4,000, a 60% discount.

Nevertheless, a number of crypto merchants, together with pseudonymous merchants Physician Revenue and Merlijn The Dealer, are “insanely bullish” and argue that Ether could possibly be the “greatest alternative available in the market.”