Ethereum is like Amazon in the 90s: Huge potential, but use cases haven't fully emerged yetAn executive at 21Shares says Ethereum may follow a similar trajectory as Amazon, breaking existing boundaries and surprising us with revolutionary use cases we cant even imagine today. Just like few could have predicted that an online bookstore would grow into a global e-commerce and cloud computing giant, Ethereums potential is not yet fully grasped by Wall Street investors
Ethereum is like Amazon in the 90s: Huge potential, but use cases haven't fully emerged yet
An executive at 21Shares says Ethereum may follow a similar trajectory as Amazon, breaking existing boundaries and surprising us with revolutionary use cases we cant even imagine today. Just like few could have predicted that an online bookstore would grow into a global e-commerce and cloud computing giant, Ethereums potential is not yet fully grasped by Wall Street investors.
Leena ElDeeb, Research Analyst at crypto asset management firm 21Shares, says Ethereum is "complex, similar to Amazon in the 1990s huge potential but not as straightforward in its use cases." While Amazon started as an online bookstore, it eventually "reshaped the way we shop and use digital services," added Federico Brokate, Vice President and Head of US Operations at 21Shares.
Launched in 2015, Ethereum is a platform that supports basic smart contracts and now powers over $140 billion worth of decentralized finance applications. Though Ethereums market cap of $320 billion represents only 6.25% of Amazons $2 trillion valuation, Brokate points out that Ethereum has an advantage over Amazon in the 90s: a vast pool of talent dedicated to making the network more useful.
"By the late 1990s, Amazon employed around 7,600 people, Brokate said. In stark contrast, the Ethereum network today boasts over 200,000 active developers including software engineers, researchers, and protocol designers all contributing to its growth. Brokate further added, Amazon has scaled to over 1.5 million employees globally, and we might see similar growth across the Ethereum ecosystem."
Despite challenges from Solana and other Layer-1 competitors, Ethereum remains dominant in the decentralized exchange, lending, stablecoins, and real-world asset markets. The worlds largest asset manager, BlackRock, has tokenized over $533 million in money market fund tokens on Ethereum, while UBS launched a tokenized fund on November 1st. Payment giants PayPal and Visa are also developing on Ethereum.
However, Brokate points out that only a select few investors understand the potential of Ethereum," with many choosing to wait and see on spot Ethereum ETFs. ElDeeb added that short-term investors remain "cautious" and are less willing to invest in spot Ethereum ETFs until Ethereums potential and use cases are "crystal clear.
However, we remain optimistic that investor sentiment and adoption will follow a similar path of continuous growth as the market matures and Ethereums diverse applications expand, noted Katalin Tischhauser, Head of Research at Sygnum Bank. Excluding Grayscales outflows, spot ETH ETF inflows have been only 9% of spot Bitcoin ETF inflows over the first 90 days.
Tischhauser told Cointelegraph that this is largely expected, as the marketing period is shorter, investors are still digesting spot ETH ETFs, and the U.S. Securities and Exchange Commission has not allowed staking. But Tischhauser said that in 12 months, when investors will have had more time to consider the bull case for Ethereum, the situation could be very different. Thus, she is not concerned about the number of spot ETH ETF issuers recently recording consistently zero flows.
Its too early to talk about exits. Traditional investors need time. Several spot ETH ETFs have recorded tens of zero flows in recent weeks.
21Shares, one of eight spot ETH ETF issuers in the U.S., has accumulated net inflows of $21.9 million. Tischhauser said the lack of institutional fund flows could be attributed to Ethereums Layer-2 scaling strategies, which are cannibalizing revenue from the Ethereum mainnet.
CK Zheng, Chief Investment Officer of crypto hedge fund ZXSquaredCapital, told Cointelegraph that the decline in Ethereum revenue might bother many Wall Street investors who conduct cashflow analysis for valuations. However, Brokate isnt worried about Ethereums recent revenue woes, as its Layer-2 scaling strategies are attracting millions of new customers at a low cost, similar to how Amazon continued to lose money for several quarters in the 1990s. Brokate said that eventually, Layer-2 fees will become large enough to bring Ethereum mainnet fees back to previous levels.
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