Why Ethereum Investment Is ‘Completely Dead’ According to a VC

Key Points

• Why Ethereum Investment Is ‘Completely Dead’ According to a VC
• ETH/BTC ratio hits 5-year low
•  L2 networks blamed for draining Ethereum’s value
•  Fee revenue has collapsed 99% in 6 months
•  Traders still see upside despite bearish views

Ethereum is under fire—again. This time, the shots are coming from within the crypto industry itself. According to crypto venture capitalist Nic Carter, Ethereum’s decline as an investment asset is largely self-inflicted, and the culprits are what he calls “greedy” Layer-2 (L2) networks.

On March 28, Carter posted on X (formerly Twitter) saying, “The #1 cause of this is greedy Eth L2s siphoning value from the L1 and the social consensus that excess token creation was A-OK.” His comment came in response to Lekker Capital founder Quinn Thompson, who labeled ETH a “completely dead” investment.

Source: Quinn Thompson – Techtoken

The numbers back up the pessimism. Ethereum’s price relative to Bitcoin is at its lowest level in nearly five years. The ETH/BTC ratio has fallen to just 0.02260, showing a sharp decline in Ether’s strength compared to Bitcoin. Ether is currently trading at around $1,894, down more than 17% over the last month.

Thompson’s critique was harsh:

Make no mistake, $ETH as an investment is completely dead. A $225 billion market cap network that is seeing declines in transaction activity, user growth and fees/revenues. There is no investment case here. As a network with utility? Yes. As an investment? Absolutely not. pic.twitter.com/XjZNjPjy2s

— Quinn Thompson (@qthomp) March 28, 2025

L2s Drain Value While Some Traders Still Believe in ETH

The criticism comes at a time when Ethereum’s network fundamentals are under pressure. A 2024 Cointelegraph report highlighted that Ethereum’s fee revenue had collapsed by 99% in just six months. The main reason? L2s like Arbitrum, Optimism, and others are absorbing user activity and transaction fees—without returning much value to the Ethereum mainnet.

These L2s were supposed to help Ethereum scale. But instead, critics argue, they’ve become extractive, draining liquidity and attention from the Layer-1 chain. The lack of strong community pushback on these dynamics and ongoing token inflation adds fuel to the fire for skeptics like Carter and Thompson.

For more context on this, check our deeper dive into Ethereum transaction fee revenue, which explains how L2s have quietly absorbed core network value without contributing back to ETH’s base layer economy.

Ether is down 17.94% over the past 30 days. Source: CoinMarketCap – Techtoken

However, not everyone agrees. Some believe this shake-up is temporary. Venture capital firm Cinneamhain Ventures partner Adam Cochran suggests that “Based Rollups” could fix this imbalance. According to him, these rollups would bring transaction and fee value back to the Ethereum base layer, making the network more monetizable.

And even amid the price drops, some traders remain highly bullish. Popular crypto influencers like Doctor Profit and Merlijn The Trader say this might be the best buying opportunity for ETH. Despite Ethereum’s price dipping in recent months, their long-term outlook remains positive.

Ethereum is on the VERGE of a MAJOR move!

If this week closes strong, we’ll see the FIRST weekly bullish divergence since September!

Buckle up, $ETH bulls! pic.twitter.com/Nimd1ZVCfx

— Merlijn The Trader (@MerlijnTrader) March 27, 2025

Still, major institutions are also dialing back expectations. In a March 17 letter to clients, Standard Chartered slashed their 2025 ETH price target from $10,000 to $4,000 — a dramatic 60% downgrade. This aligns with recent patterns we’ve explored in Ethereum’s ongoing price struggle, driven by reduced whale activity and market skepticism.

Is This the End or Just a Reset for Ethereum?

Despite the heavy criticism, the idea that Ethereum is “completely dead” might be exaggerated. While the ETH/BTC ratio and fee metrics are weak, Ethereum still dominates the smart contract and DeFi landscape. It remains the most used blockchain for decentralized apps, with a deep developer ecosystem and high institutional recognition.

The current environment may not signal the death of Ethereum, but rather a reset. Many in the community still believe in its long-term upside, especially with upcoming protocol upgrades and L2 consolidation. There’s also optimism around Ethereum’s future growth potential, especially if Based Rollups and EIP innovations help realign incentives between L1 and L2.

Some traders argue that now is when smart money positions itself for the next cycle. And while ETH may have taken a backseat to Bitcoin in the short term, any major narrative shift—whether tech-based or political—could reignite momentum. For instance, crypto markets saw major surprises recently like the Trump-BitMEX pardon shocker—a reminder that sentiment can shift quickly in this space.

Ethereum still has room to recover, but the path forward depends on solving key issues around value capture, community governance, and network economics. Whether you’re a skeptic or a believer, one thing is clear: ETH is far from irrelevant.