Renowned Bitcoin ETF expert, Fred Krueger, voices skepticism about Ethereum's valuation despite price rally. Analysis on usage decline, market cap, competition, and regulatory challenges.
The Ethereum (ETH) market has breached the $3,000 mark for the first time since April 2022 yesterday. Nevertheless, amidst the jubilant atmosphere in the crypto sphere, Fred Krueger, a well-known Bitcoin ETF authority, has expressed a significantly different viewpoint. Krueger, an esteemed Wall Street figure and prop trader, utilized X (formerly Twitter) as a platform to air his skepticism regarding the current valuation of ETH, asserting, “ETH is entirely divorced from reality.”
Reasons Behind Ethereum's "Complete Detachment From Reality"
Krueger’s remarks arrive amidst a resurgence of investor enthusiasm in the crypto market, with Ethereum leading the charge due to its recent price surge. However, Krueger highlights a worrying trend in Ethereum blockchain utilization.
“ETH is at $3,000. Surely this must mean that a ton of people are using ETH, right? Nope. Eth, the chain has dropped from 120K active daily users in 2021, to just 66K over the last year. The top app, Uniswap V3 is only getting 16K DAUs. I remember, back in 2020 this number was 60K or more,” he observed, highlighting a decline in the platform’s direct utility and engagement.
The Bitcoin ETF specialist further scrutinized Ethereum's valuation, drawing comparisons to meme coins like Shiba Inu due to its inflated market cap, which stands at $361 billion despite the decline in active users. “It really has become a type of meme coin, similar to Shiba Inu,” Krueger noted, pointing out the stark disparity between Ethereum’s high market cap and its diminishing direct usage.
Krueger argues that Ethereum is not only overvalued but also faces fierce competition from other blockchains that surpass it in terms of transaction costs and speed. “It’s not particularly cheap ($1.50 per transaction), or fast. If you are just interested in reward points for games, or casino-style DeFi apps — Solana, Avalanche, Near etc.. all crush it.”
Krueger also voiced doubts about Ethereum's future regulatory landscape, especially concerning the possibility of an ETH exchange-traded fund (ETF). “Finally, I don’t think Gensler is going to allow an ETH ETF… I just don’t think Gary wants to make his second ETF a massive pre-mine. Sets a very bad precedent,” he remarked, reflecting on the hurdles Ethereum faces in gaining mainstream financial acceptance.
Reactions from the Crypto Community
In response to Krueger’s critical viewpoint, the crypto community on X expressed mixed opinions. One user challenged Krueger’s analysis by pointing to Ethereum’s rollup-centric roadmap and the misleading nature of using mainnet daily active users (DAU) as a metric for the platform’s health. However, Krueger remained unconvinced, stating, “Even L2s like Arbitrum have been in decline for the last 12 months. This is not the case that all is well in ETH-land.”
Another user tried to highlight the cyclical nature of DeFi and the broader crypto market, suggesting that the current downturn is a temporary phase of risk aversion. Nevertheless, Krueger dismissed these arguments, reiterating his disinterest in speculative DeFi activities and emphasizing his belief in Bitcoin as the true revolutionary cryptocurrency. “I am not interested in degen ape games. Have fun,” he stated.
Krueger’s critique extends beyond Ethereum to the wider realm of cryptocurrencies, questioning the long-term sustainability and value proposition of altcoins, including Layer 1 solutions other than Bitcoin. He argues that these platforms are unlikely to become significant value generators in the long term, likening their control mechanisms to fiat currencies but with central figures like Vitalik Buterin in place of traditional central bankers.
Krueger’s overall stance on Ethereum and the broader crypto market is apparent. “My position on ETH. At the end of the day, Bitcoin is the revolution… Every other cryptocurrency is fighting for some other much smaller use case,” he explained, underscoring his belief in Bitcoin’s unique value proposition as a decentralized, finite currency system.
At press time, the ETH price has surpassed the 0.5 Fibonacci retracement level (at $2,922), trading at $2,935. A weekly close above this threshold could confirm another leg up for the ETH price.