Debate Over Layer-1 Blockchain Valuations: Are Ethereum and Solana Facing a Massive Crash?

Controversial Discussion on Layer-1 Valuations

The crypto industry is currently marked by a passionate debate about how to appropriately value Layer-1 blockchains ^[1]. While Bitcoin enjoys special status, all other cryptocurrencies are under pressure ^[1].

The debate was triggered by an essay from Dragonfly partner Haseeb Qureshi, in which he compares Layer-1s to Amazon in an early development phase, as well as two widely discussed Substack posts by Inversion founder Santiago Roel Santos that sharply attack this perspective ^[1]. In a joint stream, both perspectives clashed head-on – technically deep, without shying away from clear positions ^[1].

Warning of Fundamental Overvaluation

The current prices of Ethereum and Solana suggest overvaluation according to critics ^[1]. The cryptocurrencies Ethereum and Solana are considered massively overvalued in this view, with a massive crash looming ^[1].

The discussion revolves around the question of what return promises can really be derived from ETH, SOL, and other L1 coins, and whether other crypto assets are more attractive as investments ^[1]. This also raises the question of whether Ethereum and others truly have sustainable competitive advantages ^[1].

Comparison to the Dotcom Bubble

The dotcom bubble demonstrated that overvalued markets can collapse ^[1]. This historical analogy is being invoked in the current debate to illustrate the potential danger for Layer-1 blockchains ^[1].

Difficult Market Environment

In the current market environment, it's hard not to become cynical, according to assessments ^[1]. While there are plenty of positive fundamental signals, activity in the cryptocurrency sector – measured by Total Value Locked – is declining, and prices have recently been pointing in one direction ^[1].

In this bearish phase, Qureshi and Santos sit down together and speak openly about a question that many would rather ask behind closed doors: Are Layer-1 blockchains like Ethereum and Solana really on the verge of a massive price explosion – or are they in reality already fundamentally significantly overvalued ^[1]?

Technical Weakness in XRP

Parallel to the valuation debate, technical weaknesses are also emerging in other major cryptocurrencies. The XRP price is approaching long-term support around the 200-day Simple Moving Average at $1.82 ^[2]. The short-term indicator also shows that the price of XRP could be in a bearish trend, as the 50-day SMA remains above $2.63 ^[2].

The Relative Strength Index has also turned negative, falling to 32 – a signal that sellers continue to maintain control ^[2]. The Moving Average Convergence Divergence (MACD) on the 3-day chart shows that the Ripple token's price has lost momentum ^[2].

Alternative Investment Opportunities

The debate also raises the question of which tokens could offer better return prospects than Layer-1 coins ^[1]. This underscores the need for investors to critically review their portfolio allocation in the current market phase.