Thread by @KyleSamani

0/ There seems to be a peculiar train of thought among ETH bulls these days

"The Ethereum tech and infra and ecosystem has come so far in the last 3 years. How is ETH-BTC trading at the same price from 3 years ago?!?!?"

Here's fallacy in the logic

1/ The funny thing about this logic is that it *embraces* the fact that ETH and BTC are both trying to be money, and money is not valued (it's priced)

2/ Because there is no fundamental valuation methodology, ETH bulls like to tell themselves "The rate of tech development and usage of the ecosystem must have *some* positive impact on ETH-BTC price"

(this basically assumes BTC is beta, which is a reasonable assumption IMO)

3/ This is funny logic: no, those things don't have to do with one another

Although it's easy to trick yourself into thinking it does, especially if you're a tech-centric person (which most ETH bulls are)

4/ ETH-BTC's biggest problem over the last 6 months - and IMO likely over the next 12-24 at least - is that it's failed to live up to its expectations: scaling to be the world computer

5/ Even the reduced vision - the DeFi chain - is clearly not going to work on Ethereum 1.0. There just isn't enough throughput for more than maybe 5x the current user base

6/ Reasonable observers are looking at ETH, seeing lots of broken hopes (raiden, plasma, sharding, no interest in tokenized securities, etc) and just allocating to BTC instead

7/ There is a real irony to this - and the ETH bulls are vocal about it.

There is no way in hell BTC in its current form can scale. This is pretty clear to all ETH bulls

8/ Why then is BTC not suffering like ETH?

Because the market's expectations are orders of magnitude lower.

9/ The idea of BTC as a settlement layer separate from payments layer resonates because that's how the world already works

Even though this vision is clearly stupid and assumes that technology stops moving forward

10/ And so, for now, the BTC story in tact, despite its long term fundamental problems

And the ETH story is pretty weak. There is not much evidence to support DeFi today is more than altcoin traders trading against themselves

People are tired of waiting

11/ ETH is not unique in having this problem

Basically all 2015-2017 era alts are going through the same problem, and they are all likely to continue to contract against BTC through this cycle, until they can demonstrate product/market fit and value capture

12/ Disclosure: Multicoin Capital is long ETH-USD

{fin}

Also, Multicoin Capital is long BTC-USD