crypto Investor Ryan Sean Adams argument on December 4 that ethereum's (eth) current valuation of around $2,200 is almost “hilarious” given the strengthening activity on the chain and the role of the blockchain in the sphere.
Venture Capitalist: Here's Why ethereum Is Very Undervalued
Adams cited data as the first smart contract platform to generate billions annually in “gas” fees, becoming deflationary after merging in September 2021, and the most a million validators bet earning more than 5% as a reward. Additionally, the venture capitalist noted the potential for the United States Securities and Exchange Commission (SEC) to approve ethereum spot ETFs in the long term.
For now, BlackRock and Fidelity, two of the world's most prominent traditional financial players, have applied to issue these derivative products. Although the SEC has yet to approve any crypto spot ETFs, the agency will authorize one or several, likely early in the first quarter of 2024.
Generally, the cryptocurrency market expects any spot ETF, including ethereum, to attract billions in institutional capital. Beyond external factors like SEC talks and ETFs, Adams also pointed to growing demand for mainnet block space from the multiple layer 2 solutions running off-chain rollups parallel to ethereum.
eth value is derived from on-chain activities
According L2Beat, ethereum Layer 2 solutions have over $14.9 billion as total value locked (TVL), and top platforms including Arbitrum One, OP Mainnet, Starknet, and Base control billions and process tens of thousands of transactions daily. Last week, Adams noted that the top layer 2 accumulators were the top 10 consumers of ethereum block space.
Comparing ethereum using traditional metrics such as price-earnings (P/E) ratios that compare favorably to technology companies like Amazon and Zoom, Adams suggested that ethereum's upside is almost mathematically inevitable in this cycle.
The venture capitalist, based on the above factors, believes that ethereum could likely rise 10-fold, lifting the currency to over $22,000 per coin. Still, the investor cannot accurately estimate how long markets will “remain irrational,” vastly undervaluing the second most valuable currency.
In response, Uniswap founder Hayden Adams agreed that ethereum fundamentals would drive appreciation. Still, the founder think ethereum gains strength not from speculation attributes, as Ryan Sean Adams noted. The founder of Uniswap is confident that demand for active protocols launching on the mainnet and competing for scarce block space will directly drive prices up.
According Ultra sound money, Uniswap helps ethereum burn the most coins. In the last month alone, Uniswap took more than 14,900 eth out of circulation, helping the network become more deflationary.
Featured image from Canva, TradingView chart
