Ethereum advocate market maker was insulted as an idiot, has ETH reached its peak?

Written by: kkk

After the Federal Reserve announced the interest rate cut, the crypto market not only did not usher in the expected continuous rise but instead experienced severe fluctuations on September 22, with a single day liquidation amount reaching as high as 1.7 billion USD, setting the largest liquidation record since December 2024, of which the ETH liquidation amount was close to 500 million USD. However, amid the market's despair, Tom Lee, the "spokesperson" who frequently supported ETH during this bull market, still boldly expressed optimism on social media, even setting a long-term price target of 60,000 USD and claiming that it would not fall below the key levels of 4,300 and 4,000 in the short term, but ultimately those levels were breached consecutively.

On September 24, Andrew Kang, the founder of the crypto venture capital firm Mechanism Capital, spoke out against Tom Lee, stating that his theory about ETH is "like a fool," and put forward five major points to refute it, causing quite a stir in the industry.

Andrew Kang's Counterattack

1. The popularization of stablecoins and RWAs will not bring the expected benefits.

One of Tom Lee's core arguments is that as stablecoins and tokenized assets (RWAs) continue to grow, Ethereum as the underlying settlement layer will benefit from this, with increased transaction volume leading to more fee income, thus giving ETH long-term upward potential.

This logic sounds quite reasonable at first glance, but upon closer examination, you will find that the facts are quite the opposite. Despite the fact that since 2020, the trading volume of stablecoins and the scale of tokenized assets have expanded by hundreds of times, the transaction fee revenue of the Ethereum network has hardly increased. The reason is not complicated: network upgrades have improved processing efficiency, reducing the cost per transaction; a large amount of stablecoin activity is flowing to other public chains.

The fundamental issue is that most tokenized financial assets "lie idle" and their low-frequency circulation cannot contribute sufficient income to the ETH network. You can record trillions of dollars in bonds on the chain, but if they are only traded once a year, it is worth less than a USDT transfer.

The imagined "asset on-chain = ETH appreciation" is being fragmented in reality by chains like Solana, Arbitrum, Tempo, etc., and even Tether has simply built its own Plasma and Stable chains, keeping the trading volume within its own system. All of this indicates that ETH's positioning as a "financial foundation" is facing substantial upheaval.

2. The metaphor of "digital oil" is not accurate.

Tom attempted to liken ETH to "digital oil," probably hoping to shape a narrative of an indispensable, steadily growing resource. However, anyone a bit familiar with the commodity market knows that oil prices, when adjusted for inflation, have basically fluctuated within a wide range for the past century. Its increase is often due to short-term disturbances like geopolitical conflicts and supply-demand mismatches, which quickly revert afterward.

So if ETH is indeed a digital commodity, then from an investment perspective, it resembles a cyclical asset, and its long-term valuation does not have a logical basis for continuous appreciation. This analogy does not support Tom's bullish argument; instead, it exposes the essence of his lack of deep thinking about "analogies."

3. Institutional buying and staking ETH? Purely fantasy.

Tom also suggested that future financial institutions will buy large amounts of ETH for staking, thereby enhancing the security of the chain and serving as a form of operating capital. This statement sounds grand, but the reality is extremely stark.

So far, no large bank or asset management institution has announced plans to include ETH on their balance sheets, nor has anyone mentioned doing so. Let alone the completely unrealistic idea of using ETH as "operating capital." Would banks hoard gasoline due to continuously paying energy costs? No, they only pay when needed. Would banks buy stocks of the asset custody institutions they use? No. Therefore, the logic of institutions buying ETH does not hold.

Four, is ETH equivalent to the total value of all financial infrastructure companies? Absurd to the extreme.

Tom's valuation model can almost be described as "absurd." He claims that the value of ETH will ultimately be equivalent to the total of all financial infrastructure companies. This statement is completely disconnected from the logic of value capture in reality.

5. Technical Analysis

Tom finally brought out technical analysis (TA) to endorse ETH, trying to demonstrate its upside potential using trend lines and breakout signals. However, from the chart structure, ETH is clearly still in a multi-year sideways range, and the most recent rise was mercilessly pushed back after reaching the upper boundary. This is very similar to the wide fluctuation pattern of crude oil prices over the past thirty years - merely in a range-bound oscillation, and recently failed to break through resistance after testing the upper range. From a technical perspective, ETH is actually showing bearish signals, and the possibility of it oscillating in the long term within the range of $1000 - $4800 cannot be ruled out.

The occurrence of parabolic rises for a certain asset in the past does not mean that this trend will continue indefinitely.

If this means anything, it can only indicate that ETH is falling into a "wide range oscillation fate" similar to that of crude oil. Over the past three years, the relative price of ETH/BTC has actually been on a downward trend, and it has only recently experienced a brief rebound near long-term support. The fundamental reason has not changed: the core narrative of Ethereum has become saturated, and there has not been enough new structural force in the fundamentals to support a valuation breakthrough. If we talk about where ETH's high valuation comes from, it is more of a bubble stacked by financial illiteracy's enthusiasm. This bubble may expand for a long time, just like XRP once did, but it ultimately cannot escape the return of the law of value forever.

How do you view this debate?

Andrew Kang's views are indeed quite persuasive at a time when market sentiment is weak, especially the doubts about ETH's ability to capture value, which resonate with many investors' anxieties. However, it should not be taken at face value—looking back to April, when ETH was still at a low, Kang boldly predicted it would fall below $1000, while in this bull market, ETH has at one point approached $5000, far from his initial pessimistic prediction.

However, the debate surrounding the value logic of ETH has transcended the price controversy itself and will have a profound impact on the future trends of the entire cryptocurrency market. During the three months of ETH's rise, the "Wall Street faction" represented by Tom Lee dominated the discourse and even the pricing power of ETH—he attracted a large number of institutions and retail investors with grand narratives such as "digital oil" and "global financial infrastructure." In contrast, the counterattack led by Andrew Kang seeks to awaken the market's awareness of another dimension: Are we overly optimistic about the future of ETH?

If Andrew Kang's argument resonates with the market, the biggest beneficiaries will be high-throughput, low-fee public chains represented by Solana, or Ethereum Layer 2 solutions represented by Arbitrum. Even stablecoin issuers like Tether have launched public chains such as Plasma for value capture of USDT. Projects that have deployed multi-chain solutions or are exploring cross-chain ecosystems will also gain an advantage in a multi-chain future due to their flexibility. If ETH's performance continues to deviate from the grand goals set by Tom Lee, his reputation and the valuation and balance sheet of his "ETH Microstrategy" Bitmine will face certain challenges.