Experts highlight a disconnect between Ethereum’s technological advancements and ETH’s market value. Sam Kazemian argues that the introduction of EIP 1559 has shifted ETH valuation to resemble tech stocks, undermining its role as a scarce asset like Bitcoin. Additionally, Ethan’s perceived worth is challenged by competition from Layer-1 blockchains and reduced institutional interest. Without a re-evaluation of ETH’s value, its future pricing remains uncertain despite ongoing innovations.
Ethereum, historically recognised for driving decentralised applications and smart contracts, now faces increasing scrutiny. According to industry expert Sam Kazemian, the ETH token has lost its correlation with the network’s expanding utility. The economic changes post EIP 1559 have rendered ETH more akin to a technology stock rather than a digital commodity like Bitcoin, placing it in a valuation predicament.
Kazemian expressed on platform X that despite Ethereum’s ongoing development and its ambition to serve as a global settlement layer, ETH pricing does not mirror the platform’s advancements. He critiques the assumption following the EIP 1559 upgrade, which burns a part of transaction fees, suggesting that likening this to stock buybacks is fundamentally misguided. Rather than being treated as a scarce asset like gold, ETH’s value is now perceived through a corporate price-to-earnings framework, which does not adequately correspond with its blockchain use.
Kazemian draws a parallel with Bitcoin, arguing that a similar fee-burning mechanism would dilute its identity as “digital gold.” He asserts that by adopting corporate valuation models, Ethereum has weakened the narrative around ETH, challenging its relevance amid rising competition.
Further supporting this view, ETH has notably lagged behind Bitcoin, hitting a multi-year low of 0.18666 in the ETH/BTC trading pair as of April 12. This means one Bitcoin now equates to over 53 ETH, a ratio unseen since early 2020, underscoring Ethereum’s struggles against Bitcoin’s momentum.
Additionally, Nic Puckrin, CEO of Coin Bureau, highlighted that despite Ethereum’s technological progress, its market position has diminished. Competing Layer-1 blockchains erode Ethereum’s dominance in smart contracts, while Ethereum-centric Layer-2 solutions, like Arbitrum and Optimism, siphon off value and liquidity from the native ETH, thus failing to link Ethereum’s infrastructure use to an increase in ETH prices.
Moreover, institutional interest in ETH pales compared to that of Bitcoin. The launch of spot ETFs and Bitcoin’s growing acceptance among traditional investors bolster BTC as the leading digital asset for large investors, while Ethereum struggles to secure similar institutional confidence.
Despite its role as a technological innovator with ongoing developments like rollups and zero-knowledge proofs towards Ethereum 2.0, the future of ETH’s price remains uncertain unless its valuation model is reconsidered. Critics posit that for ETH to rebound, it must reinforce its status as a critical, scarce resource within the network, rather than simply a speculative asset likened to tech stocks.
In summary, ETH’s current trajectory reflects a disconnect between its technological prowess and market valuation, leaving open the question of whether Ethereum can realign its narrative for future growth.
