While Bitcoin Made a New All-Time High (ATH) Following Donald Trump’s Re-Election

While Bitcoin made a new all-time high (ATH) following Donald Trump’s re-election

The price of Bitcoin (BTC) may have hit a new all-time high (ATH) following Donald Trump’s re-election, but the second-largest crypto by market cap, Ethereum (ETH), hasn’t shared the same fate.

After reaching a high of US$4,891.70 (approximately AU$7,794.11 in today’s money) in November 2021, Ether still hasn't reached that level again. This represents a hefty 68% discount, given that ETH trades now for just US$1,803.75 (AU$2,873.81).

And unfortunately for Ether-holders, even today’s price may be too high. Sure, Ethereum has use cases and utility; but it’s not a good investment, says Quinn Thompson, CIO of hedge fund Lekker Capital.

In a post on Crypto Twitter, Thompson stated that “there is no investment case” for Ethereum, adding that there is no activity, users or network fees to speak of.

There is no investment case for #Ethereum.

No one is using it, it has no users, and the network has zero activity or fees. It's being kept alive by a small group of true believers who refuse to accept that the project has failed.

— Quinn (Lekker Capital) (@Quinn_Capital) August 9, 2023

Does Ether Benefit from Layer-2s? Community is Divided

When one user on CT argued that the “entire Ethereum ecosystem” is growing, not just the main Ether blockchain, Thompson replied by saying that there is a difference in what the ecosystem does and the value of ETH.

"There's a crucial distinction. The Ethereum ecosystem, encompassing projects like Optimism, Starknet, and Aegis, is indeed expanding with increasing activity and users. This growth, however, doesn't necessarily translate directly to an increase in the price or utility of the native ETH token. It's a common misconception."

Other users pointed out that once the ecosystem grows, ETH will actually benefit from fees, as other chains use it as a gas token.

Maybe learn about the economics of how this all works before jumping to conclusions too fast. Ethereum will profit handsomely from the growth of its ecosystem once it hits its tipping point.

— BlitPay (@BlitPay) August 9, 2023

When asked what would make him bullish on Ether, Thompson said it would need to have at least 1 million active users and a median transaction fee of over 0.01 ETH.

For perspective, Bitcoin has around 100,000 active users daily and a median transaction fee of around 0.0004 BTC, which comes out to roughly US$10 (AU$16) today.

At the moment, it seems like only a small group of people are interested in keeping the blockchain alive.

"It's being kept alive by a small group of true believers who refuse to accept that the project has failed and continue to pump out articles and analysis about how it's going to make a comeback," said the Lekker CIO.

When asked if he'd rather invest in Bitcoin, Thompson said he'd prefer to put his money in a high-yield savings account.

The implication being that even BTC, the largest cryptocurrency by market cap, isn’t a good investment in his book.

This coincides with earlier statements by the CIO, where he said that he's never seen "less active users, less activity, less throughput, less use cases, less interest or higher fees” on any chain other than Ethereum.

The chain is also entering the final test phase for the Pectra upgrade, following earlier failures with the Holesky and Sepolia upgrades.

Despite these trying times for Ethereum, there is a silver lining. While the start of the US spot Ethereum exchange-traded funds (ETFs) has been underwhelming compared to the Bitcoin ETFs, they still hold up quite well in the history of ETFs.

As BlackRock’s head of digital assets, Robbie Mitchnick, pointed out, there have only been a few ETFs that have seen more than US$4 billion (AU$6.36 billion) in inflows within six months.

However, Mitchnick believes the ETFs would have done even better if they had ETH staking as a feature. And while it won’t be easy to introduce staking to the ETFs, once done it will be “a step change upward” for interest in Ether ETFs.