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Ethereum as a viable investment asset is increasingly being questioned, with crypto experts blaming the network’s declining value on the rise of Layer-2 (L2) solutions and unchecked token creation.
In a March 28 X post, Castle Island Ventures partner Nic Carter criticized Ethereum’s current trajectory, arguing that its Layer-2 networks are siphoning value away from the mainnet. He claimed that excessive token creation, accepted by the ETH community, has diluted the network’s investment potential.
“The #1 cause of this is greedy ETH L2s siphoning value from the L1 and the social consensus that excess token creation was A-OK,” Carter wrote, adding that Ethereum “died by its own hand” due to token oversupply.
His remarks came in response to Lekker Capital founder Quinn Thompson, who declared that Ethereum is “completely dead” as an investment. Thompson argued that while the network still holds utility, it no longer offers an attractive investment case.
“A $225 billion market cap network that is seeing declines in transaction activity, user growth, and fees/revenues. There is no investment case here. As a network with utility? Yes. As an investment? Absolutely not,” Thompson stated.
Layer-2 Solutions Pulling Value From Ethereum Mainnet
The ETH/BTC ratio, which measures Ether’s strength against Bitcoin, recently hit 0.02260—its lowest level in nearly five years, according to TradingView data.
At the time of writing, Ether is trading at approximately $1,894, reflecting a 5.34% decline over the past week, per CoinMarketCap data.
The situation worsened in September 2024, when Ethereum’s fee revenue collapsed by 99% over a six-month period. Analysts attributed this to L2 networks absorbing transactions and fee revenue without contributing back to the base layer.
However, Cinneamhain Ventures partner Adam Cochran believes that Based Rollups could offer a solution. He argued that these rollups could redirect monetization back to Ethereum’s mainnet by reshaping the incentive structure, potentially reviving its value.
Mixed Sentiment on ETH Future
Despite the current bearish sentiment, some crypto traders remain optimistic. Pseudonymous traders Doctor Profit and Merlijn The Trader recently called Ethereum “the best opportunity in the market,” expressing bullish long-term views.
Meanwhile, Standard Chartered lowered its 2025 ETH price estimate from $10,000 to $4,000—a 60% reduction—citing weaker-than-expected fundamentals.
