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 Worth Has Nothing to Do With Utility
Szabo’s core declare is stark: “a elementary downside with ETH valuation is that ethereum’s major makes use of instances are largely exterior to ETH’s market worth.” In his view, Ethereum “could be very helpful,” its purposes “can garner nice income,” and but “ETH can nonetheless be low worth — or vice versa — there’s 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 worth,” including that “Bitcoin’s fundamental design is way extra suited to this use case, so ETH can’t simply mimic it, it has to depend on different use instances poorly linked to its worth.” For Szabo, the crux is structural: utility on Ethereum doesn’t reliably translate into worth seize by ETH, whereas Bitcoin’s objective and worth 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 traders routinely over-engineer Layer-1 valuation fashions whereas worth and narrative do the heavy lifting. “Again and again I see folks overthink L1 valuations,” he wrote, framing the final leg of ETH energy as a story pivot slightly than a spreadsheet breakthrough.
Why Has ETH Worth Tripled Since April?
“The one distinction between $1400 ETH and $5000 ETH was Bitmine.” In April, he says, “Ethereum was a dying platform.” At present, “it’s the stablecoin chain and the subsequent ‘Bitcoin-like’ alternative for establishments.” The lesson he attracts is blunt: “Worth leads narratives so they are saying.”
Crucially, Watkins shouldn’t be insisting these narratives are justified — he’s highlighting the vacuum they fill. “The purpose right here isn’t about whether or not any of that is justified. The purpose is that the absence of agreed upon valuation methodologies creates a void that solely narratives and relative frameworks can fill.”
He floats competing bull instances not as convictions however as open hypotheses: “Is the ETH bull case that it turns into a take charge on world GDP? What about it changing into ‘programmable Bitcoin’ which intrinsically can’t be valued? How about each? The reality 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 an alternative anchors to relative worth and narratives? Properly 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 higher traction throughout virtually each financial metric.”
He dismisses these as “goofy” workouts, however helpful for navigation: “we will theorize all we wish, or navigate the atmosphere in entrance of us.” Till 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 continued over time. It’s a sport of flows and narratives till the social gathering stops.”
Each views could be true without delay. 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 controversy itself is the sign: ETH is transferring by way of a cycle the place perceptions of objective, not simply measurable cash-flow analogs, set the tone.
At press time, ETH traded at $4,701.92.
Featured picture created with DALL.E, chart from TradingView.com
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