Ethereum, the world’s largest altcoin, has received strong scrutiny by analyst Fred Krueger, who posits that ETH is in a 'death spiral'.
Krueger: 'Ethereum’s Fee Model is Broken'
Krueger’s analysis was based on information provided by community members highlighting Ethereum’s dwindling daily revenue. According to him, Ethereum’s daily revenue for 2024 has plummeted by over 90% year-to-date, a record low for the altcoin. He argues that the current daily fee revenue of $200,000, which amounts to about $73 million annually, is insufficient to sustain the network’s current valuation and its $300 billion market cap.
Is Fee Decline a Sign of Growth?
Krueger compared Ethereum to Bitcoin, noting that Bitcoin derives its value from being a digital currency similar to gold, backed by 'hard proof of work'. He suggests that buying Bitcoin and selling Ethereum might lead to investor satisfaction. However, Ryan Watkins, cofounder of SyncracyCapital, disagrees with Krueger, believing that the decline in fees is a positive sign for Ethereum.
Another Expert’s View
Ryan Watkins claims that Ethereum will reach new highs in its on-chain activity despite the significant fee reduction, which he interprets as a bullish sign. He emphasizes that the reduction in fees will facilitate the onboarding of billions into the crypto space via Ethereum, ensuring its growth and utility. At the time of writing, Ethereum is trading at $2,491.97, representing a 0.86% drop in price.
The criticism of Ethereum’s fee model has sparked significant discussions within the community. Despite the substantial decrease in revenue, some experts see positive prospects for the network’s growth and development.
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