December 2025
For many years now, I’ve been bullish on bitcoin, and continue to be, but have not extended that view toward any other cryptocurrency.
That decision continues to hold up well. Since I first recommended it in April 2020, it has gone from $6,900 to $126,000, and is currently back down to around $85,000. CoinMarketCap identifies literally millions of cryptocurrencies, and yet bitcoin alone represents 60% of all value in the space, and more like 70% when you exclude dollar-collateralized stablecoins.
-In January 2021, I analyzed the economics of Ethereum by popular request and explained why I wouldn’t be investing in it. This post made enough waves that Ethereum’s creator provided comments on it, since the Bankless group organized a community response to it (which I shared on Twitter, so people could see the other side). Looking back nearly five years later, ETH has failed to make any higher-highs relative to BTC compared to its 2017 peak.
-During spring 2022 in my research service, I warned in detail about Terra/Luna’s stability problem when it was still at its highs. When it crashed and went to zero a month later, I wrote a post-mortem about it called “Digital Alchemy” which re-iterated why I am bearish on virtually all cryptos outside of bitcoin.
-In December 2022, during the deep industry-wide bear market, I wrote a piece called “The Problem with DeFi and Crypto” which outlined numerous problems in the broad crypto industry. These problems ranged from hidden types of centralization to sketchy VC practices of getting exit liquidity for themselves and dumping on retail investors before anything of sustained value was established. Since then, the price of bitcoin bounced back well into new highs, but the broader crypto industry has had underwhelming returns, most coins haven’t gotten back to prior highs, and there aren’t many strong narratives in the space left.
Here We Go Again
It’s been nearly two years since that last article, so once again I’m taking a moment to re-iterate my lack of enthusiasm for anything in the industry outside of bitcoin and stablecoins.
That doesn’t mean that certain assets won’t be tradeable for those that enjoy that type of thing. Nor does it mean that there are no other blockchains that offer some utility.
For example, in that aforementioned January 2021 piece that was critical of Ethereum itself as an investment, I stated that I was bullish on stablecoin proliferation (in the context of Ethereum being one of the two biggest rails for stablecoins to run on):
Stablecoins are particularly important, in my view. I’m bullish on the amount of money locked up in stablecoins.
-January 2021
Since then, the market capitalization of stablecoins has increased from $32 billion at the time of publication to over $290 billion today. There is raging demand for them, and they continue to grow quickly in use. However, other than the small handful of companies that issue them, one cannot really invest in them. They’re pegged to the US dollar.
Instead, what I mean is that blockchains outside of bitcoin will likely continue to fail to accrue major value on a sustained basis. In certain raging liquidity-fueled bull markets where everything goes up, then plenty of them could temporarily trade well, but if we stop and look back in another four or five years, I think yet again the results for the vast majority of them will be weak.
Commoditized Tech Rails Accrue Limited Value
Back in 2017, John Pfeffer wrote a paper called An Institutional Investor’s Take on Cryptoassets.
The main thesis of the paper was that utility blockchains are unlikely to accrue much long-term value even when they are useful, whereas the winning monetary protocol (e.g. Bitcoin) can indeed accrue substantial value. To the extent that utility blockchains add value in some capacity, it will be the users that primarily benefit (such as users of stablecoins, for instance) rather than the long-term coinholders of the underlying chain.
Eight years later, that paper has been prescient. Utility protocols face heavy competition, and thus their value trends toward their marginal cost of operation. In contrast, the Bitcoin network has grown considerably in value as a monetary asset and portable store of value. Bitcoins are held for their own sake, due to the network’s perceived high level of security and supply assurances, rather than as a means to an end to perform some other function. And as such, bitcoin price benefits from the growing network effect of the Bitcoin network itself.
Examples: ETFs and Stock Exchanges
Most people wouldn’t think of Exchange Traded Funds or ETFs as a “technology”, but they basically are. The introduction of ETFs revolutionized the asset management industry, and for decades now there has been a persistent shift from less-liquid investment vehicles toward ETFs.
As of mid-2025, US ETFs collectively had about $11.5 trillion worth of assets in them according to the Fed, with J.P. Morgan estimating $13+ trillion. The amount of money that has been gradually siphoned away from mutual funds and other types of asset management toward exchanged traded funds is harder to overstate. It’s enormous.
One might assume that the issuers of ETFs are some of the most valuable companies in the world, right?
Wrong.
ETFDB.com collects data on most ETF issuers, and the results are surprising.
The top four alone (BlackRock, Vanguard, State Street, and Invesco) account for about $10 trillion of the assets under management in the US ETF industry, with the other 300+ issuers accounting for the rest. Those top four make about $11.9 billion in estimated ETF revenue per year, which rounds to about 0.12% average fee rates. And then of course they have expenses in order to operate those ETFs.
If anyone tries to charge high fees, they’ll likely be undercut by a competitor. The fees have trended down toward the marginal cost of operation.
BlackRock has a sizable market capitalization of $150+ billion, but most of that comes from their actively managed non-ETF business. Similarly, State Street has a market cap of $30+ billion, but most of that is related to their custodian bank business, and only a small share is attributable to their ETF business. Invesco has a market cap of around $10 billion which is also substantially boosted by their large non-ETF business. Vanguard is owned by its own funds but from a revenue perspective is hypothetically worth about what Invesco is worth.
The market capitalization of the entire ETF industry itself (the value of the companies that create and run all the ETFs) is likely under $200 billion total when all their non-ETF business lines are stripped out. This small market capitalization is despite the fact that they manage ~$13 trillion in ETF assets.
ETFs themselves have added tremendous value and flexibility for users. However, they’ve accrued way less value to asset managers and their investors than one would expect.
Meanwhile, Ethereum alone currently has a market cap of over $350 billion. That’s far larger than the value of the whole ETF asset manager industry combined, even though it has about two orders of magnitude less in locked value (stablecoins, DeFi, etc) than ETFs. And Ethereum faces competition from other smart contract blockchains and layer-twos that serve similar functionality.
So, when people say they are bullish on Ethereum because it’s going to supposedly serve as the rails for all sorts of things, I look around and say, “compared to what?” It’s already priced as though it’ll be massive tech rails for something larger than all ETFs combined, and yet it doesn’t serve a function nearly that large. You don’t need to hold the coin of a network to use it; you just need to buy some and use it for fees in the moment.
However, ETF issuers mainly make money from how much assets they have under management, not from trading volumes. Cryptocurrencies can be designed such that transaction volumes from usage can flow toward their coinholders in various ways.
So, let’s also take a look at stock exchanges. The stock market of the United States is currently worth more than $60 trillion, and the majority of that value trades on the NYSE and Nasdaq. Their typical trading volumes are each in the hundreds of billions of dollars per day. Their holding companies must be some of the most valuable things in the world, right?
Again, the answer is not really. NYSE’s parent company is worth about $90 billion, and Nasdaq’s parent company is worth a little over $50 billion. Their combined market cap is less than half of Ethereum’s current market cap. Solana alone already has a bigger market cap than Nasdaq’s parent company despite only having a tiny fraction of the economic relevance that runs on it. Binance Coin alone has a bigger market cap than NYSE’s parent company.
Valuing cryptocurrencies by their programmable utility, including what their utility might be in ten years or more, suggests they are already expensive.
Exhausted Narratives
-People tried to make coins that sacrificed some degree of auditability for more privacy, or sacrificed some degree of decentralization for more single-layer scalability, or added more attack surfaces for some additional script complexity, and the market hasn’t particularly embraced any of that even if there are niches where they are appreciated.
-Initial coin offerings or “ICOs” were a big deal two bull cycles ago, but there generally was no actual sustainable product there, and they were mainly a way to raise capital around the typical SEC disclosure practice, and without a durable product. Basically penny stocks on steroids.
-Decentralized exchanges and decentralized leveraging protocols (to the extent that they’re even truly decentralized, which they’re usually not) were big during the prior cycle, but there’s only so much demand for them when 1) most of the coins are useless and 2) decentralized trading and leveraging competes with centralized providers, and thus has a ceiling on how big it can get. While there is some utility value in DeFi, it basically lets users transform custodial risk into technical risk (e.g. bridge protocol hacks), which is not a free lunch.
-NFTs and digital collectibles broadly were big during prior cycles as well, but again there was limited overall demand. Many NFTs don’t even host the content on-chain; they often just point to a server. While a given NFT collection might be scarce, an endless supply of new collections came to market and eventually exhausted demand. While some early collections may maintain residual value as artifacts of historical curiosity, this is not some giant market either.
-Eventually the industry degraded to meme coins as a narrative. People realized that most of these things above are solutions in search of a problem and/or not as decentralized as they claim to be, and that venture capitalists were drumming up hype for token projects and dumping those tokens on retail investors as bagholders. So, the industry turned cynical and embraced meme coins: projects that transparently have no value to begin with. They’re just for speculating, i.e. international gambling. And just like NFTs, more and more came to market until demand was satiated and early money got out, leaving late entrants left to hold the bag.
While new things might pop up, I think the bulk of this has run its course. Now it has degraded into sheer frivolity along with a handful of small-but-useful tech rails for tokenized currencies and equities.
The inherent speculative nature to the industry has frequently disguised how little actual demand and substance there is to the products once the initial token speculation runs its course, and how little sustained long-term value will accrue to the coinholders of the handful of successful products as the revenues of blockchains trend toward the marginal cost of operation, with plenty of competition in the field.
Where Opportunity Is
I continue to have a long-term bullish view on the Bitcoin network. It’s not without risk, but based on various traits it has, I continue to have a structurally positive opinion on it within the context of a diversified portfolio. That’s because bitcoin is primarily acquired for its own sake as portable capital rather than primarily used as the utility rails for something else.
Outside of that, I continue to be bullish on the growth of total stablecoin market capitalization as the modern-day digital eurodollar, and to some extent I am bullish on other types of tokenized assets such as equities. These are basically mechanisms to get desired assets (dollars, high-quality equities, etc.) into the hands of people who want them but that otherwise have trouble accessing those core markets directly because of where they live.
In my view, Bitcoin at a ~$2 trillion market capitalization remains rather early. Much like how people thought that the large-cap tech stocks (e.g. “FAANG” stocks) were too expensive in the 2010s and then went on to dwarf that size in the 2020s, I think the Bitcoin network, while rather large, still has plenty of room to run in its long-term adoption. In an ocean of hundreds of trillions of dollars worth of liquid assets, Bitcoin remains the best-in-class asset for portable capital and decentralized settlement with strong network effects in play.
This view of course has to be tempered with its relatively high level of volatility, technical risk, and regulatory risk. As such, investors can determine the right level of allocation for their portfolios.