Founder of the currency circle venture capital: Ethereum is the Intel of the currency circle?
It has been nearly 10 years since Ethereum was launched. Not only is it the second largest cryptocurrency by market capitalization, it also has a large number of supporters in the currency circle. However, Andrew Kang, co-founder of cryptocurrency venture capital firm Mechanism, believes that Ethereum is like Intel among technology stocks. Although it was once very popular, its fundamentals are not good.
The following is what Andrew Kang said:
Ethereum is often compared to technology stocks. If comparisons were to be made, the best comparison would be with Intel, which was once one of the hottest companies in the world with unlimited growth prospects.
Intel's stock price has gone through several bubbles, with the first big bubble usually being the peak. Decline becomes more apparent as growth is limited, innovation slows, and competitors capture market share. This leads to a decline in expected growth, affecting The multiple that investors value it at.
Tell me, how do you sell something to investors that has a market capitalization of US$420 billion, a price-to-earnings ratio of 200 times, but negative revenue and earnings growth? Cryptocurrency fools will buy into it, but based on current fundamentals, to believe that traditional finance will also buy into it on a large scale is a pipe dream.
The trend of Ethereum is similar to that of Intel and Cisco
Andrew Kang shared the historical K-line charts of Intel and Ethereum ($ETH), and it can be seen that the two have similar trends.
Source: X/Andrew Kang
Intel Corporation (Intel) Stock Historical Trends
Source: X/Andrew Kang
Ethereum ($ETH) historical trend
If the comparison company were Cisco, the results would be even worse. Cisco is a network hardware and software sales company. During the Internet bubble, its market value peaked at $500 billion.
Source: X/Andrew Kang
Cisco stock historical trends
Why are you bearish on Ethereum? Kang reveals the 3 major causes of death
Andrew Kang said that believing that Ethereum is the Nvidia or Amazon of the currency circle is a kind of blind optimism. These companies have year-over-year growth plans and historical revenue growth to back them up. But this is not the case for Ethereum. The following 3 major factors show poor fundamentals:
The NFT market is declining
On-chain transactions are being moved to other chains
Handling fees (gas) are on a downward trend
Andrew Kang concluded: "This kind of thinking is really the typical bubble high illusion that you can see in every cycle."
Will the Ethereum spot ETF have a big impact after its listing?
After the listing of Bitcoin spot ETF, a large amount of funds poured in, and the price also increased significantly, but can the Ethereum spot ETF bring the same effect? Andrew Kang is not optimistic for the following reasons:
1. Traffic
Andrew Kang predicts that the true net inflow amount of Ethereum spot ETF is about 15% of Bitcoin. According to his estimate, the real net inflow of Bitcoin ETF since its listing is US$5 billion.
2. Institutional interest
Andrew Kang pointed out that before the listing of the Ethereum ETF, the open interest of CME Group Bitcoin futures was much lower than that of Bitcoin, reflecting the lack of interest in the Ethereum ETF from traditional finance.
3. Global consensus
Andrew Kang believes that Bitcoin is becoming one of the major global investment portfolios, and there are many large accumulators: micro-strategies, TEDA companies, family offices, individuals with high net worth assets, etc. Ethereum also has some large accumulators, but far fewer than Bitcoin.
4. ETF expectations have long been digested
Andrew Kang believes that investors’ expectations for Ethereum ETFs are too high and they have misjudged the true preferences of traditional finance. Since BlackRock applied for a Bitcoin ETF, Bitcoin and Ethereum have risen 2.6 times and 2.1 times respectively, and based on cycle lows, both have risen approximately 4 times.
After seeing the success of the Bitcoin ETF, the crypto market had the same expectations for Ethereum and allocated accordingly.
Therefore, he believes that Ethereum’s upside potential will be limited after the Ethereum ETF is listed, and he expects the price to fall between $2,400 and $3,000. However, if Bitcoin rises to $100,000 next year, it may bring Ethereum to a new all-time high, but the ETH/BTC trend (ETH/BTC) will be lower, and it is estimated to fall between 0.035-0.06.
[Disclaimer] There are risks in the market, so investment needs to be cautious. This article does not constitute investment advice, and users should consider whether any opinions, views or conclusions contained in this article are appropriate for their particular circumstances. Invest accordingly and do so at your own risk.