Ethereum bubble warnings return as ETH struggles below $3K

ethereum eth tvl defi
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Key Takeaways:

  • Ethereum skeptic Stefan W. Huber accused the platform of being a “bubble” and a “scam”.
  • Mr. Huber cited a 2-year-old interview, where network executives confess to being aware that the 1.0 version is not scalable.
  • The gas fees on Ethereum continue to rage, but the TVL is on the rise.
  • Security could be the reason for choosing the platform, despite the high fees.
  • The ETH token slipped below $3,000.

YEREVAN (CoinChapter.com) – Ethereum (ETH) couldn’t hold the $3,000 psychological resistance level with any confidence, while the platform faced scrutiny for failing to deliver its 2.0 upgrade on time. Analyst Stefan W. Huber tweeted a warning to all Ethereum supporters on Monday. He claimed that the network is no more than a bubble and will “cruelly burst” soon enough.

The analyst noted that the funds rolling into the system do not have an adequate release in the form of a scalable network that Ethereum executives promised years ago.

Stefan W. Huber vs Ethereum

Mr. Huber’s indignation was partially brought on by the notoriously high transaction fees on the platform. For example, sources report that a wallet on the Bitfinex crypto exchange recently ended up paying over $23 million on a single transaction for allocating 100,000 USDT.

Calling Ethereum a “scam,” the politician earlier cited a 2019 interview with Joseph Lubin, the founder of ConsenSys (software development firm behind Ethereum). During the interview, the executive noted he was aware that Ethereum 1.0, the first smart contract platform, would not be scalable and that it was a “prototype” for 2.0.

Mr. Huber also called on Charles Gasparino, a correspondent at Fox Business Network (FBN), to address the matter in his investigation with the US Securities and Exchange Commission (SEC). The politician claimed that the SEC only went after XRP to “buy more time for Ethereum.”

In detail, the SEC is currently involved in several lawsuits against blockchain companies, the loudest being the one against Ripple Labs and its XRP token. However, Willliam Hinman, the ex-Director of Corporate Finance at SEC, cleared Bitcoin and Ethereum back in 2018, establishing their status as non-securities.

The tweets presented above sparked a heated discussion. The politician’s followers divided themselves into two pro and con camps, debating the utility of Ethereum.

Also read: All cryptocurrencies except Ripple (XRP) are speculative, former US Treasurer claims

Why Ethereum?

The high gas fees and unfulfilled expectations prompted many traders and developers to flock to other DeFi platforms, such as Solana, Polkadot, or Cardano. However, Ethereum still holds the lion’s share of all DeFi applications and the largest TVL (total value locked) in the sphere.

Ethereum's TVL holds over 70% of the whole DeFi sector. Source: ETH on defillama.com
Ethereum’s TVL holds over 70% of the whole DeFi sector. Source: ETH on defillama.com

While the total DeFi TVL stood at $174 billion on Tuesday, Ethereum alone was responsible for $123 billion, or 70.6%. One of the reasons is that Ethereum is the first DeFi platform to put forth the idea of smart contract functionality. The latter made decentralized apps possible.

However, another factor in support of the largest DeFi platform is its security.

Most of the Ethereum ecosystem-related hacks don’t happen on its blockchain. Rather they happen on the “outskirts” of the system, on layer-2 scalability solutions. So the security issue might be the first obstacle on the way to fast transactions and lower fees.

However, it remains one of the reasons there are far more dApps built on Ethereum than any other DeFi platform.

Also read: Long-term Bitcoin holders now have 80.5% control over BTC supply

Meanwhile, ETH…

…struggled to hold its head above the $3,000 mark. The ETH/USD exchange rate slid down to $2,944 in the Tuesday session and showed no signs of confident recovery. The digital asset followed in Bitcoin’s footsteps and drew a similar- patterned price action. While Bitcoin consolidated, so did Ethereum and many smaller altcoins like Cardano (ADA), Ripple (XRP), and Polkadot (DOT).

Ethereum (ETH) daily chart. Source: ETHUSD on TradingView.com
Ethereum (ETH) daily chart. Source: ETHUSD on TradingView.com

Also read: Metcalfe’s law predicts Ethereum (ETH) and Bitcoin (BTC) gains ahead, says executive

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