Why I Am Not Bullish on Ethereum at Its Current State?
Why I'm Not Bullish on Ethereum at Current Prices
The author expresses skepticism about Ethereum's current valuation, not its long-term business growth potential (user base and transaction volume are expected to increase). The author believes the price is too high relative to its fundamentals, based on the following analysis:
- Active users and transaction counts have reached new highs but are growing slower than some leading e-commerce platforms.
- Monthly transaction fees are only 0.6% of the previous cycle's peak, and average fees per transaction are 0.5% of previous highs. This slow growth comes at the cost of drastically reduced service prices, which is unfavorable in any industry.
- If Ethereum is viewed as a company selling block space, its price-to-fee (PF) ratio exceeds 2,000x and its price-to-sales (PS) ratio exceeds 10,000x. It has negative net profit, so no P/E ratio exists. In comparison, traditional cloud service companies have P/E ratios of 20-30 and single-digit PS ratios.
- If considered a commodity (like digital oil), Ethereum faces competition from other chains and rollups offering similar services. Its value proposition may not justify such a high premium, especially as its narrative as a store of value (like Bitcoin) has faded.
- There is a lack of new, product-market-fit crypto native applications this cycle, leading to oversupply of block space and stagnant growth in the public chain sector.
- Grand visions of Ethereum becoming a decentralized "Wall Street on-chain" lack supporting data and factual evidence. The author advocates for investment based on rationality, not belief or hype, and suggests waiting for concrete data before buying into this narrative.
marsbit01/19 09:08
