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In a recent post titled "ETH is completely detached from reality. A deep dive," on the X platform, Fred Krueger, known for his staunch support of Bitcoin, delivered a harsh critique of Ethereum (ETH), highlighting concerning trends and indicating a bleak outlook for the second-largest cryptocurrency by market capitalization.
Concerns over ETH's declining user activity
Krueger began by pointing out that despite Ethereum's soaring price, indicative of a robust ecosystem, the actual usage of the Ethereum blockchain has witnessed a notable decline. He highlighted that while ETH has surged to $3,000, the number of Daily Active Users (DAUs) on the Ethereum network has dwindled from 120,000 in 2021 to a mere 66,000 in the past year.
The decline in active users is further exemplified by the dwindling numbers on Uniswap V3, Ethereum's leading decentralized exchange (DEX) protocol. With just 16,000 DAUs, a stark contrast to the 60,000-plus seen in 2020, Krueger noted that Ethereum's utility as a transactional platform seems to be eroding.
ETH is completely detached from reality. A deep dive.
— Fred Krueger (@dotkrueger) February 21, 2024
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ETH is at $3,000. Surely this must mean that a ton of people are using ETH, and that this number is only going up, right?
Nope.
Eth, the chain has dropped from 120K… pic.twitter.com/141GwtB0yz
This statistic is particularly alarming considering Ethereum's role in the decentralized finance (DeFi) ecosystem and its aspirations to become the backbone of various decentralized applications (dApps), especially in the face of the upcoming Dencun Upgrade.
Ethereum: Meme coin in disguise?
Krueger likened Ethereum's current state to that of a "meme coin," drawing parallels to assets like Shiba Inu (SHIB). He emphasized that despite its soaring valuation, Ethereum's utility seems to have dwindled, particularly in comparison to other blockchain networks such as Solana, Avalanche and Near, which offer cheaper and faster transactions.
Krueger also expressed skepticism regarding the possibility of an Ethereum Exchange-Traded Fund (ETF) approval, citing concerns about regulatory scrutiny.
With Gary Gensler, the Chairman of the U.S. Securities and Exchange Commission (SEC), unlikely to greenlight an Ethereum ETF due to potential issues surrounding its premined nature, Krueger cautioned against banking on such an approval as a catalyst for Ethereum's growth.