VanEck CEO Defends Ethereum

By Crypto A Yao

Amid intense criticism of the Ethereum blockchain and its poor performance this year, VanEck head of digital assets Matthew Sigel has come to the defense of the network, citing its strong economic model. Even after the launch of a spot Ethereum ETF in July 2024, the ETH price has been criticized for failing to show enough traction.

VanEck's Matthew Sigel Responds to Criticism of Ethereum

VanEck head of digital assets Matthew Sigel expressed his displeasure with the recent ETH bashing, calling it "exhausting and disingenuous." Sigel stressed the importance of "moneyness" for layer 1 blockchains like Ethereum and Solana when comparing them to the price-to-earnings (PE) ratios of traditional finance.

Users should always judge a blockchain based on its usage, utility, and trust in its ecosystem as a medium of exchange, store of value, and unit of account, he said. Sigel added that Ethereum’s core utility stems from its role in supporting validators by paying transaction fees, driving wider use of DeFi and other services.

The VanEck CEO also argued that the value of a token comes from the demand for goods and services used for transactions, and that Ethereum’s economic activity contributes to its long-term value. In addition, Sigel acknowledged some of the challenges facing the blockchain.

He said the proliferation of Ethereum’s layer 2 solutions is driving the capture of transaction fees, which could reduce the blockchain’s revenue. However, as the ETH ecosystem grows, its focus on data availability could become more profitable. Additionally, Ethereum co-founder Vitalik Buterin recently said he doesn’t like holding L2 tokens.

Sigel added that Solana’s low price has attracted many Defi participants to the platform. However, he added that Solana’s fees should increase over time to justify its valuation.

ETH price faces bearish sentiment

Weak demand and continued outflows from spot Ethereum ETFs have led to a lack of catalysts for ETH prices to rise. On the other hand, other macro factors and hackers selling $42 million in ETH have also contributed to the plunge in ETH prices.

As of press time, Ethereum prices fell 2.6% to $2,284, with a market value of $274 billion. The cryptocurrency market generally collapsed after Nvidia's stock price plummeted on Friday.

Demand in the Ethereum spot ETF market is also weakening, with total outflows exceeding $500 million since launch. On Friday, VanEck even decided to shut down its Ethereum futures ETF due to weakening market demand.

Interestingly, analysts continue to be bullish on ETH, believing that this is the last calm before the storm.