After the Fed announced a rate cut, the crypto market not only did not see the expected continuous rise but instead experienced a violent shakeout on September 22nd — with a single-day liquidation amount reaching as high as $1.7 billion, marking the largest settlement record since December 2024, with ETH liquidation amount nearing $500 million. However, amidst the market carnage, during this bull run, the frequent Ethereum advocate Tom Lee remained bullish on social media, even setting a long-term price target of $60,000 for ETH and claiming that it would not break below the key levels of $4300 and $4000 in the short term, which were subsequently breached.

On September 24th, Andrew Kang, the founder of crypto venture capital firm Mechanism Capital, spoke out against this, bluntly stating that Tom Lee's theory on ETH was "childish" and putting forth five points to refute it, causing quite a stir in the industry.

Andrew Kang's Rebuttal

1. The Adoption of Stablecoins and RWAs Will Not Bring the Expected Benefits

One of Tom Lee's core arguments is that as stablecoins and tokenized real-world assets (RWAs) continue to grow, Ethereum as the underlying settlement layer will benefit from it, with increased transaction volume bringing in more fee revenue, thus giving ETH long-term upside potential.

At first glance, this logic may seem reasonable, but upon closer inspection, you will find that the reality is quite the opposite. Despite the massive expansion of stablecoin trading volume and RWA scale since 2020, Ethereum network's transaction fee revenue has hardly increased. The reason is not complex: network upgrades have improved processing efficiency, reducing the cost per transaction; a significant amount of stablecoin activity is now flowing to other blockchains.

Moreover, the fundamental issue lies in the fact that tokenized financial assets mostly "sit still," their low-frequency circulation cannot contribute enough revenue to the ETH network. You could perfectly record trillions of dollars' worth of bonds on-chain, but if they only trade once a year, they are of less value than a single USDT transfer.

The envisioned "asset securitization = ETH appreciation" is currently being eroded by chains like Solana, Arbitrum, Tempo, among others, even Tether has boldly built its Plasma and Stable chains, keeping transaction volumes within its ecosystem. All of this indicates that ETH's positioning as a "financial bedrock" is facing substantial upheaval in reality.

Two, The Analogy of "Digital Oil" is not Accurate

Tom tried to compare ETH to "digital oil," perhaps aiming to shape a narrative of an indispensable, stable-growth resource. However, anyone slightly familiar with the commodity market would know that the price of oil has mostly fluctuated within a wide range over the past hundred years after adjusting for inflation. Its price spikes often result from short-term disruptions such as geopolitical conflicts and supply-demand mismatches, only to swiftly retreat afterward.

Therefore, if ETH were truly a digital commodity, from an investment perspective, it would more resemble a cyclical asset, with its long-term valuation not inherently supported by continuous growth logic. This analogy did not help Tom's bullish argument; instead, it exposed his lack of profound reflection on "analogies."

Three, Institutions Buying and Staking ETH? Pure Fantasy

Tom also proposed that future financial institutions would heavily buy ETH for staking to enhance the chain's security and use it as operational capital. This statement sounds grandiose, but the reality is extremely stark.

Thus far, no major bank or asset management institution has announced plans to add ETH to their balance sheets, let alone using ETH as "operational capital," a notion entirely detached from reality. Would banks hoard gasoline because they constantly pay for energy costs? No, they would only pay when needed. Would banks buy stock in the asset custody firms they use? No. Therefore, the logic of institutions buying ETH does not hold.

Four, ETH Equivalent to the Total Value of All Financial Infrastructure Companies? Utterly Absurd

Tom's valuation model can almost be described as "absurd." He claims that the value of ETH will ultimately be equivalent to the sum of all financial infrastructure companies. This assertion completely lacks the realistic value-capture rationale.

Five, Technical Analysis

Tom finally presented technical analysis (TA) to endorse ETH, attempting to argue its upward potential using trendlines and breakout signals. However, from a chart structure perspective, ETH is evidently still within a multi-year consolidation range, with the recent price surge even harshly rejected after reaching the upper boundary. This is not dissimilar to the wide-ranging oscillation pattern of oil prices over the past thirty years—solely within a range bound; recent attempts to breach the upper limit have failed. From a technical standpoint, ETH instead exhibits bearish signals, and the possibility of its long-term oscillation between $1,000 and $4,800 cannot be ruled out.

An asset's past parabolic rise does not mean that this trend will continue indefinitely.

If it signifies anything, it can only indicate that ETH is falling into a fate similar to that of crude oil's "wide-range oscillation destiny." Over the past three years, the relative price of ETH/BTC has actually been on a downtrend, with a recent brief bounce near long-term support. The fundamental reason has not changed: Ethereum's core narrative is saturated, and there has not been enough new structural force to support a valuation breakthrough. If ETH's overvaluation comes from anywhere, it is more of a bubble stacked by the frenzy of financial illiterates. This bubble may inflate for a long time, as XRP once did, but it cannot escape the return to the law of value forever.

How to View This Debate

Andrew Kang's viewpoint is indeed persuasive at a time when market sentiment is fragile, especially his questioning of ETH's value-capture ability, which has hit the anxiety of many investors. However, it should not be taken entirely at face value—looking back at April, when ETH was still at a low point, Kang boldly predicted that it would fall below $1,000, yet in this bull market cycle, ETH at one point approached $5,000, a far cry from his original bearish forecast.

Nevertheless, this debate on ETH's value logic has transcended the price dispute itself, and will have a profound impact on the future trend of the entire crypto market. In the past three months of ETH's rise, the "Wall Street camp" represented by Tom Lee has dominated the discourse and even the pricing power of ETH—he has attracted a large number of institutions and retail investors through grand narratives such as "digital oil" and "global financial infrastructure." In contrast, the counterattack by the native crypto community led by Andrew Kang is attempting to awaken the market to another dimension of understanding: Are we holding overly optimistic expectations for ETH's future?

If Andrew Kang's argument resonates with the market, then the biggest beneficiaries will be high-throughput, low-fee public chains represented by Solana, or Ethereum Layer 2 solutions represented by Arbitrum, or stablecoin issuers like Tether, who have launched public chains such as Plasma to capture USDT's value. Projects that have achieved multi-chain deployment or are exploring cross-chain ecosystems will also gain a first-mover advantage in the multi-chain future. If ETH's performance continues to deviate from Tom Lee's grand targets, his own reputation and the valuation and balance sheet of his "ETH strategy" Bitmine will face certain challenges.

Welcome to join the official BlockBeats community:

Telegram Subscription Group: https://t.me/theblockbeats

Telegram Discussion Group: https://t.me/BlockBeats_App

Official Twitter Account: https://twitter.com/BlockBeatsAsia