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 truly 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 “may be very helpful,” its purposes “can garner nice income,” and but “ETH can nonetheless be low worth — or vice versa — there may be little hyperlink between them.”
He contrasts this with Bitcoin, whose “fundamental use case is as a retailer of worth, which is strongly linked to its worth,” including that “Bitcoin’s primary design is much 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 goal 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 buyers 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 relatively 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 isn’t 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 price 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 a substitute anchors to relative worth and narratives? Properly BTC is $2 trillion. So who’s to say ETH shouldn’t be 50% of that? It gives 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 better traction throughout virtually each financial metric.”
He dismisses these as “goofy” workouts, however helpful for navigation: “we are able to theorize all we wish, or navigate the setting in entrance of us.” Till fundamentals reassert, “don’t overthink it.” In his closing line, he defines the sting plainly: “There’s an unlimited aggressive benefit for property which have penetrated mainstream consciousness and endured over time. It’s a recreation of flows and narratives till the occasion stops.”
Each views may be true without delay. Markets might proceed to cost ETH primarily via 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 via a cycle the place perceptions of goal, 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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