Experts Dismiss Ethereum’s ‘Funeral’ as Premature

Concerns that Layer 2 solutions are eroding Ethereum’s main network revenues and affecting ETH’s price may be premature. This was stated by Sygnum Bank’s head of research, Katalin Tischhauser, in a conversation with Cointelegraph.

“It is too early to say whether Ethereum’s [scaling] strategy through Layer 2 solutions is cannibalistic or will lead to net growth,” she noted. 

By “cannibalistic,” she refers to the approach of “taking business” from the mainnet in terms of payments and fee collection. The crypto bank analyst believes that while the loss of L1 network revenues was inevitable, optimizing scalability could lead to new revenue streams previously deemed impossible. 

“If L2 growth proves significant, the net effect should be a rise for Ethereum,” she added. 

Over the past couple of years, users have been paying around $1-5 million in daily fees on the Ethereum network, significantly lower than the $30 million-$60 million range seen in 2021-2022. 

Tischhauser believes that sentiment in the Ethereum community has been “terrible” lately, partly due to declining revenues. This affects pricing. On October 25, Ether hit a local low against Bitcoin, falling to 0.03658. 

The last time such a low value was observed was in April 2021.

VanEck’s head of digital assets, Matthew Sigel, believes that continued L2 scaling could slow Ether’s development and price growth. 

The current transaction revenue ratio between Ethereum and Layer 2 networks is 10 to 90. The expert lowered his ETH price forecast for 2030 from $22,200 to $7,300 if the trend continues. 

First of all, the #ETH $22k price target is for 2030, whereas the Election Prediction was for 2024.

But I do agree that the changing fundamentals suggest a model update is in order.

We assumed a 50:50 split on TVL between Ethereum and L2s and 50:50 split on projected MEV (which… https://t.co/RB1ZRVzLaN pic.twitter.com/GiPoQT7IYA

— matthew sigel, recovering CFA (@matthew_sigel) October 17, 2024

21Shares analyst Lina El-Dib highlighted the growing competition Ethereum faces from other Layer 1 blockchains offering lower fees and faster finality. 

Apollo Capital’s Chief Investment Officer Henrik Andersson stated that the scaling strategy of the second-largest cryptocurrency by market capitalization has, on the contrary, helped it maintain popularity and remain a leading Layer 1 blockchain.

“By making Ethereum successful, you will ultimately generate much more revenue in the long term, as otherwise users would migrate to other networks,” he emphasized. 

The expert speculates that Ether will reach a new all-time high during 2025.

Back in August, 1confirmation founder Nick Tomaino stated that Ethereum would surpass the leading cryptocurrency in market capitalization within five years.

In October, QCP Capital noted the coin’s high chances of breaking the $2,800 resistance and reaching $3,000.