Ethereum's (ETH) declining appeal as an investment comes from layer-2's draining value

Despite optimism toward the end of last year about Ether reaching $10,000 in 2025 — especially after reaching $4,000 in December

Crypto venture capitalist Nic Carter believes that greedy layer-2s (L2s) siphoning value from the main network and a lack of community pushback on excessive token creation are to blame for Ether's (ETH) declining appeal as an investment.

"The #1 cause of this is greedy Eth L2s siphoning value from the L1 and the social consensus that excess token creation was A-OK. ETH was buried in an avalanche of its own tokens. Died by its own hand," the Castle Island Ventures partner said in a March 28 X post.

This came in response to Lekker Capital founder Quinn Thompson, who claimed that Ether is "completely dead" as an investment.

"A $225 billion market cap network that is seeing declines in transaction activity, user growth and fees/revenues. There is no investment case here. As a network with utility? Yes. As an investment? Absolutely not," Thompson said.

The ETH/BTC ratio, which shows Ether's relative strength compared to Bitcoin (BTC), is sitting at 0.02260, its lowest level in nearly five years, according to TradingView data.

At the time of publication, Ether is trading at $1,894, down 5.34% over the past seven days, according to CoinMarketCap data.

Meanwhile, Cointelegraph Magazine reported in September 2024 that fee revenue for Ethereum had "collapsed" by 99% over the previous six months as "extractive L2s" absorbed all the users, transactions and fee revenue while contributing nothing to the base layer.

Around the same time, Cinneamhain Ventures partner Adam Cochran said Based Rollups could solve the issue of L2 networks pulling liquidity and revenue from the blockchain's base layer.

Cochran said Based Rollups could "directly impact the monetization of Ethereum by making a pretty fundamental change to incentive structures."

Despite optimism toward the end of last year about Ether reaching $10,000 in 2025 — especially after reaching $4,000 in December, the same month Bitcoin touched $100,000 for the first time — it has since seen a sharp decline alongside the broader crypto market downturn.

Standard Chartered added to the bearish outlook via a March 17 client letter, which revised down their end of 2025 ETH price estimate from $10,000 to $4,000, a 60% reduction.

However, several crypto traders, including pseudonymous traders Doctor Profit and Merlijn The Trader, are "insanely bullish" and argue that Ether could be the "best opportunity in the market."