A crypto venture capitalist suggests that Ethereum’s (ETH) decreasing attractiveness as an investment is attributable to the overuse of layer-2 (L2) solutions siphoning value away from the primary network and a lack of community resistance to excessive token generation.
Nic Carter, a partner at Castle Island Ventures, voiced his concerns on March 28 by stating, “The chief culprit here are the overzealous Ethereum L2s draining value from the L1 and the social acceptance that rampant token creation was perfectly acceptable.” Carter also responded to the assertion made by Lekker Capital’s founder Quinn Thompson, who labelled Ethereum as a “totally dead” investment.
According to Carter, “Ethereum was overwhelmed by a deluge of its own tokens. It was self-destructive.” Thompson, on the other hand, pointed out that Ethereum, with a market cap of $225 billion, is experiencing dwindling transaction activity, user growth, and fees/revenues, arguing that it has no value as an investment, though it might still serve as a useful network.
TradingView data reveals that the ETH/BTC ratio – an indicator of Ethereum’s strength relative to Bitcoin – is currently at 0.02260, the lowest in nearly half a decade. As per CoinMarketCap data, Ethereum is currently trading at $1,894, a 5.34% decrease over the past week.
Notably, a Cointelegraph Magazine report from September 2024 highlighted a 99% drop in Ethereum’s fee revenue over the previous six months as “predatory L2s” seized all user activity, transactions, and fee revenue, contributing nothing to the base layer in return.
However, Adam Cochran of Cinneamhain Ventures suggested that Based Rollups could address the issue of Ethereum’s L2 networks extracting liquidity and revenue from the base layer of the blockchain. Cochran believes that Based Rollups could “significantly alter Ethereum’s monetization by introducing a fundamental change to incentive structures.”
While last year ended with optimism regarding Ethereum reaching $10,000 by 2025, its value has plummeted alongside the wider crypto market downturn. Standard Chartered further dampened spirits by lowering their end of 2025 ETH price prediction from $10,000 to $4,000 in a March 17 client letter – a 60% reduction.
Despite this, several crypto traders, including Doctor Profit and Merlijn The Trader, remain “extremely bullish,” arguing that Ethereum could still be the “most promising opportunity in the market.”
