The Ultimate Anti-Climax
Ethereum’s recent shift to POS marked the beginning of what many considered to be a rebirthing, an event that would forever change the course of ETH. However, at least in my opinion, not much has changed. The changes that we do see are not necessarily good. In particular, the high level of centralization is the very thing Vitalik spent his formative years in the blockchain space addressing.
The Ethereum co-founder was once a firm advocate of decentralization, and now, ETH has ironically become a mammoth feeding upon the “ancient delicacies” of centralization. There are still many who believe that ETH will soon hit the $10K level. To be clear, I have no doubt that ETH will eventually hit $10K and ultimately surpass it. However, considering the potential upside, it is something that no longer interests me.
Projects such as Cardano and others are likely to outperform ETH. Ethereum achieved a return of approximately 50X from the covid low to the 2021 peak. Cardano, on the other hand, secured well over 100X. A similar outcome is likely to occur in the next bull market. The risk is perhaps moderately less, in terms of ETH. However, there is more decentralization and other “positive” aspects that are inherently more “honorable” in terms of alternative layer 1s.
I have a fairly good idea of where ETH is ultimately headed. In essence, I believe it to be counterintuitive in regard to the fundamental “ethics” of Crypto. Sure, this is the case for many projects out there. However, as I mentioned, there are alternatives that offer better risk/reward and are more true to the foundational values of Crypto. This is where I am choosing to base my attention, effort, and capital.
Who’s Powering The Light?
Sure, the future of Ethereum is bright, but who’s enabling and empowering that light? To some, this is of little concern. However, to others, it’s of significant concern. Newcomers arrive for the money. Those of us who have been here for almost a decade, and more, arrived for different reasons. That’s not to say that gains are excluded. However, there are many other reasons and motivations why we became interested in Crypto.
Some of Vitalik’s recent tweets sound alarm bells for me. There are those who will undoubtedly defend Ethereum to the death. However, I never allocate that amount of trust toward something of this nature. A Cryptocurrency is a tool that serves a purpose and hopefully appreciates in value. I have strong convictions, but I avoid religiosity at all costs. Maxis are a dangerous breed, for the simple fact that whatever challenges their view is rejected.
This is how people enter into delusions, and ultimately lose all sense of objectivity. One of the best ways to gain a true perspective is to remove oneself and view a situation objectively. This includes entertaining thoughts and opinions contrary to your own. During 2021 I was heavily exposed to ETH. At one point it accounted for almost half of my portfolio. I decided to begin scaling out above $4000.
This process saw me scale out at an average price of $3800/$3900 over a number of months. I don’t think I will hold a meaningful allocation of ETH again, but you never know, things happen in this space. Some may consider excluding ETH unwise. However, I have experienced pretty decent gains, and have learned my lesson when it comes to “overmilking a cash cow”. For me, it’s time to move on.
At the end of the day, ETH is becoming much like BTC, in terms of potential gains. The potential upside is significant, but there are alternative projects that have much more attractive risk/reward ratios. Ultimately, each man decides his path. It all depends on what I replace ETH with, right? Perhaps ETH goes on to perform better than expected. That being said, my alternative could go on to completely outperform ETH. In the same breath, it could fail.
These are the risks that make investing so rewarding, and equally as dangerous. Make informed decisions, and be willing to experience either outcome. Furthermore, consider what either outcome would mean for the project. Can it thrive, will it survive? What challenges does it face, and does it have what it takes?
Thanks for stopping by. Catch you in the next edition.