The legendary Nick Szabo and Ryan Watkins, co-founder of Cyncracy Capital, laid out opposing frameworks for understanding the Ethereum pool and its valuation mechanics in a pair of
The price of Ethereum has nothing to do with interest
Szabo’s basic claim is stark: “A fundamental problem with valuing ETH is that the fundamental use cases for Ethereum are largely exogenous to the market value of ETH.” In his opinion, Ethereum “can be very profitable,” its applications “can generate significant revenue,” however, “ETH can be low — or vice versa — there is little connection between them.”
He contrasts this with Bitcoin, whose “main use case is as a store of value, which is strongly tied to its price,” adding that “Bitcoin’s basic design is more suited to this use case, so ETH can’t just emulate it, it has to rely on other use cases tied to its price.” For SZABO, the core is structural: utility on Ethereum does not reliably translate to value capture by ETH, while Bitcoin's purpose and price are intertwined by design.
The statement by Szabó, who returned to the X in late September 2025 after a five-year absence, came in response to Watkins. The market researcher comes from the opposite angle, arguing that investors routinely fall back on Tier-1 valuation models while price and the combo do the heavy lifting. “Over and over again I see people overthink L1 valuations,” he wrote, framing ETH’s recent run of strength as a narrative pivot rather than a spreadsheet hack.
Why has the price of ETH tripled since April?
“The only difference between $1,400 ETH and $5,000 ETH was a bitmap.” In April, he says: “Ethereum was the platform of death.” Today, “it's the Stablecoin chain and the next 'Bitcoin-like' opportunity for enterprises.” The lesson he draws is straightforward: “Price drives novels so they say.”
Crucially, Watkins does not insist that these narratives are justified—he highlights the void they fill. “The important point here is not about whether any of this is justified. The important point is that the lack of agreed evaluation methodologies creates a vacuum that only relative narratives and frameworks can fill.”
It floats over competing bull cases not as hallmarks, but rather as open hypotheses: “Is it a tattered bull case that becomes its rate in global GDP? What about it becoming a ‘programmable Bitcoin’ that is intrinsically inestimable?”
This uncertainty, he says, drives markets toward fixation on simple comparisons and flows: “So what happens when the market instead fixes relative value and narratives? Well BTC is $2 trillion. So who's to say ETH shouldn't be 50% of that? It provides everything it exceeds everything it exceeds.”
He dismisses them as “clumsy” exercises, but they are useful for navigation: “We can theorize all we want, or navigate the environment in front of us.” Until the basics are established, “don't even think about it.” In his closing line, The Edge clearly defines it: “There is a huge competitive advantage to assets that have penetrated the mainstream consciousness and persisted over time. It is a game of flows and narratives until the party stops.”
Both views can be true simultaneously. Markets may continue to price ETH primarily by narratives and relative value while the question posed by SZABO—whether the design of Ethereum can consist of a permanent link between network utility and token value—remains unanswered. For now, the debate itself is indicative: ETH is moving through a cycle where perceptions of purpose, not just the counterpart of measurable cash flow, set the tone.
At press time, ETH was trading at $4,701.92.
Featured image created with dall.e, Chart from TradingView.com
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