Crypto venture capitalist Andrew Kang compared Ethereum (CRYPTO: ETH) to tech stocks and sees parallels between the current price action and that of May 2021.
What Happened: He notes that during both periods, the market was about 9-10 months into a bullish momentum but cautions that this does not mean the market is immune to extreme corrections over a multi-month time horizon.
Kang also expressed skepticism about the ability of support levels and ranges to hold in the face of potential market disruptions, such as the selling of Mt Gox estate and ETF buyers selling. He singled out NVIDIA (NASDAQ:NVDA) as appearing to be at a local top and suggested that the only buyers currently seem to be leverage and short-term traders trying to catch a falling knife.
Also Read: Ethereum’s Price After The ETFs Start Trading? Between $2,400 And $3,000, Says Crypto VC: Here’s Why
Why It Matters: Kang draws a parallel between Ethereum and well-known tech companies, suggesting that ETH’s current valuation and growth prospects resemble past tech bubbles rather than the sustained growth seen by companies like NVIDIA and Amazon (NASDAQ:AMZN).
He believes that Ethereum's trajectory mirrors Intel's (NASDAQ:INTL), which once had unbounded growth expectations but eventually faced slower innovation and fierce competition. This dynamic leads to lower projected growth rates and, consequently, lower valuations.
Ethereum’s fundamentals currently do not support its high valuation. "Tell me how you pitch 200x PS, negative revenue growth, and negative profitability to investors at a $420 billion price," he challenges. Kang believes that while some crypto enthusiasts might buy into this narrative, it's unrealistic to assume TradFi investors will do the same given the present fundamentals.
Ethereum faces declining interest in NFTs, migration of on-chain trading to other networks, and falling network fees.
What’s Next: The influence of Ethereum as an institutional asset class is expected to be thoroughly explored at Benzinga’s upcoming Future of Digital Assets event on Nov. 19.
This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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