Ethereum has been performing extremely well over the last few days and is even gaining against Bitcoin according to TradingView's ETH/BTC charts.
The cryptocurrency finally hit the $3,000 zone for the first time since breaking below in April 2022, on Tuesday, 21st February, this week.
Every sector in the Ethereum ecosystem is thriving, from Defi to NFTs and the upcoming Dencun upgrade.
However, Not everyone is convinced that Ethereum's rally makes any sense.
According to Fred Krueger, Ethereum's price rally is "completely detached from reality", and we might be seeing a corrective dump soon.
Here are Krueger's arguments, as well as all of the reasons why he may be wrong—or very right.
First off, some background information on Krueger.
Krueger is a prominent Bitcoin ETF expert and former Wall Street trader, Stanford math PhD and investor, meaning that he just might know what he's talking about.
In a recent tweet, Krueger says that Ethereum lacks "actual usage", and may be "detached from reality".
He means that the number of active daily users (also known as DAUs) on the Ethereum network has dropped by almost half in the last year, from around 120,000 users per day in 2021 to about 66,000 in 2024.
Moreover, he also claims that Uniswap V3 (which is the most popular Dapp on Ethereum) has a meagre 16,000 DAUs, which is a fraction of what it had in 2020.
Krueger argues that this decline in DAUs might signal a lack of usage and engagement on the Ethereum network.
And as such, the price shouldn't be rising this much.
Krueger even went as far as comparing Ethereum to Shiba Inu, which he says has a high market cap, but almost no use case in the real world.
Krueger asks how Ethereum has a $361 billion market cap, which is larger than the GDP of many countries when it has such low user activity.
To put things simply, Krueger may be making the same mistake that most "doom and gloom" predictors (as well as some bulls) make:
Picking one metric and judging an entire network with its value.
Krueger's analysis is solid but fails to consider how the DAU metric may not be the best indicator of a network token's price.
What about the diversity of the Dapps that run on the network? What about the whales? What about simple laws of demand and supply?
Ethereum is by far the most diverse Dapp ecosystem on the planet, with decentralised applications spanning finance, gaming, art and even social media.
Each of these Dapps has a different user base and may not even require so many users or daily interactions.
Moreover, Ethereum's decline in usage doesn't account for staking.
According to DefiLlama, Ethereum currently has nearly $40 billion worth of ETH staked in the network, which is about 92% of the staking TVL across all chains
Staking requires validators to simply lock up their funds in the network for a specified period, which reduces the ETH circulating supply and directly affects prices.
This is without mentioning the influence of the whales, crypto exchange activity, and many other factors.
With this in mind, Krueger's analyses, while valid, may not be the most accurate way to quantify what the price of ETH should (or shouldn't) be.
According to the charts, it appears that the bears are mounting some kind of resistance around the $3,000 zone.
The chart above shows a solid barrier against the bulls around $3,050, as well as a long red candle that shows the bears are active around this price level.
As far as the charts are concerned, this is the time for the bulls to act.
If this price rejection goes on for longer, Ethereum might decline straight down to retest its 20-day EMA, which currently sits at around $2,681, and coincides with the previous $2,700 support from 12 January.
Overall, Ethereum's price prospects seem bullish over the longer-term timeframes, and we might be seeing a $3,500 Ethereum soon.
Disclaimer: Voice of Crypto aims to deliver accurate and up-to-date information, but it will not be responsible for any missing facts or inaccurate information. Cryptocurrencies are highly volatile financial assets, so research and make your own financial decisions.