Ethereum Has A Fundamental Problem, Warns Cyberphunk Nick Szabo
Legendary cyberphunk Nick Szabo and Ryan Watkins, co-founder of Syncracy Capital, laid out opposing frameworks for understanding Ethereum’s rally and its valuation mechanics in a pair of X posts — and collectively they learn like a point-counterpoint on what really drives Layer-1 costs.
Ethereum Price Has Nothing to Do With Utility
Szabo’s core claim is stark: “a elementary downside with ETH valuation is that ethereum’s major makes use of circumstances are largely exterior to ETH’s market worth.” In his view, Ethereum “will be very helpful,” its functions “can garner nice income,” and but “ETH can nonetheless be low value — or vice versa — there may be little hyperlink between them.”
He contrasts this with Bitcoin, whose “major use case is as a retailer of worth, which is strongly linked to its value,” including that “Bitcoin’s primary design is way extra suited to this use case, so ETH can’t simply mimic it, it has to depend on different use circumstances poorly linked to its value.” For Szabo, the crux is structural: utility on Ethereum doesn’t reliably translate into worth seize by ETH, whereas Bitcoin’s goal and value are entwined by design.
Szabo’s assertion, who returned to X in late September 2025 after a five-year absence, got here in response to a by Watkins. The researcher comes on the market from the other angle, arguing that buyers routinely over-engineer Layer-1 valuation fashions whereas value and narrative do the heavy lifting. “Time and once more I see individuals overthink L1 valuations,” he wrote, framing the final leg of ETH power as a story pivot quite than a spreadsheet breakthrough.
Why Has ETH Price Tripled Since April?
“The solely distinction between $1400 ETH and $5000 ETH was Bitmine.” In April, he says, “Ethereum was a dying platform.” Today, “it’s the stablecoin chain and the subsequent ‘Bitcoin-like’ alternative for establishments.” The lesson he attracts is blunt: “Price leads narratives so they are saying.”
Crucially, Watkins will not be insisting these narratives are justified — he’s highlighting the vacuum they fill. “The level right here isn’t about whether or not any of that is justified. The level is that the absence of agreed upon valuation methodologies creates a void that solely narratives and relative frameworks can fill.”
He floats competing bull circumstances not as convictions however as open hypotheses: “Is the ETH bull case that it turns into a take charge on international GDP? What about it changing into ‘programmable Bitcoin’ which intrinsically can’t be valued? How about each? The fact is nobody is aware of.”
That uncertainty, he says, pushes markets towards anchoring on easy comparisons and flows: “So what occurs when the market as a substitute anchors to relative worth and narratives? Well BTC is $2 trillion. So who’s to say ETH shouldn’t be 50% of that? It affords a superset of Bitcoin’s performance proper? ETH is $500B. Why shouldn’t SOL be 100% or extra of that? It’s the superior product with better traction throughout nearly each financial metric.”
He dismisses these as “goofy” workouts, however helpful for navigation: “we will theorize all we would like, or navigate the setting in entrance of us.” Until fundamentals reassert, “don’t overthink it.” In his closing line, he defines the sting plainly: “There’s an infinite aggressive benefit for property which have penetrated mainstream consciousness and endured over time. It’s a recreation of flows and narratives till the celebration stops.”
Both views will be true directly. Markets might proceed to cost ETH primarily by way of narratives and relative worth whereas the query Szabo poses — whether or not Ethereum’s design can ever hard-wire a sturdy hyperlink between community utility and token worth — stays unanswered. For now, the talk itself is the sign: ETH is shifting by way of a cycle the place perceptions of goal, not simply measurable cash-flow analogs, set the tone.
At press time, ETH traded at $4,701.92.
