|Ethereum perma-bulls may want to consider their investment thesis after reading the latest report from Tetras Capital, a NY-based hedge fund dialed in on the blockchain industry…. … and dialed out of ETH |
As noted in their blog, Tetras started shorting Ethereum in May. Their rationale in short? Ethereum is still overvalued.
A quick peek at the exterior reveals that KPIs are looking favorable:
- ~$48 billion market cap
- 30+ ERC-20 tokens valued north of $100M
- 1,500+ decentralized apps
- ~750,000 transactions per day
But under the hood, things are falling apart. Tetras argued that Ethereum’s two preliminary use cases were to serve as a platform that (1) supported dApp development, and (2) facilitated capital raising.
How ETH *could* fall short
We’re not in 2017 anymore – Ethereum is no longer the sole platform capable of raising capital for ICOs. The fact that there are now a wider variety of fundraising options available makes it hard to imagine ETH seeing renewed similar demand pressure as when Ethereum was the lone option.
Then, there are regulations. Due to the SEC’s tendency to slam improperly labeled ICO offerings into the Earth, companies that *should* be classified as security tokens are less willing to deny the fact to avoid regulations during their fundraising rounds. That would expectedly decrease demand further.
On a related note: If this plays out, would it not constitute a radical shift in crypto market behavior? Dethroning the idea that all markets are heavily influenced by Bitcoin could make crypto even more perilous for retail investors lacking an institutional-grade toolbelt.