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Nick Szabo, a prominent computer scientist known for introducing the concept of smart contracts, says that ETH’s valuation has a very low correlation to the Ethereum network’s use cases.
“A fundamental problem with ETH valuation is that ethereum’s primary use cases are largely external to ETH’s market value,” he wrote on X.
“Ethereum can be very useful, its apps can garner great revenue, and ETH can still be low price — or vice versa — there is little link between them,” he added.
Ethereum And Bitcoin Are Valuable For Different Reasons
Szabo’s post comes after a long-standing debate over Bitcoin versus Ethereum. Over the years, there have been talks that ETH could eventually flip BTC to become the largest crypto in the market, but this is yet to happen.
According to Szabo, Ethereum and Bitcoin play different roles in the market, and are therefore valuable for different reasons.
Ethereum serves as a programmable platform that can be used to build decentralized applications, issue tokens, or run smart contracts. While the ecosystem can thrive in this regard, it does not necessarily contribute to the value of Ethereum’s native ETH token, according to the computer scientist.
On the other hand, Bitcoin’s main purpose is to be a store of value similar to gold, “which is strongly linked to its price,” Szabo said. “And Bitcoin’s basic design is far more suited to this use case,” he added.
As such, he concluded his post by saying that ETH can’t be valued the same way that BTC is valued, and that the token “has to rely on other use cases poorly linked to its price.”
With regards to price, both BTC and ETH have gone on to set new all-time highs (ATHs) this year.
Bitcoin itself has achieved back-to-back record peaks in the past 48 hours. The first one was set on Oct. 5, when the largest crypto by market cap managed to breach above the $125K mark. Just 24 hours later, BTC then went on to soar to an ATH of $126,198.07, data from CoinMarketCap shows.
Meanwhile, ETH achieved its ATH of $4,736.21 on Aug. 24. It has since fallen over 5% to trade at $4,654.31 as of 4:20 a.m. EST.
ETH price (Source: CoinMarketCap)
From a market cap perspective, BTC has a fully diluted value (FDV) of $2.59 trillion, while ETH’s FDV is much lower at around $561.28 billion.
Crypto Prices Driven By Narratives, Not Hard Fundamentals
Szabo’s post was a reply to a tweet by Syncrancy Capital co-founder Ryan Watkins. In his post, Watkins argued that narratives in the market drive the prices of crypto, and not a project’s actual fundamentals.
He said that the main reason for that is because there is no clear agreed-upon way to value layer-1 blockchains like Ethereum and Solana, causing people to overthink valuations.
A fundamental problem with ETH valuation is that ethereum’s primary uses cases are largely external to ETH’s market value. Ethereum can be very useful, its apps can garner great revenue, and ETH can still be low price — or vice versa — there is little link between them. OTOH,…
— Nick Szabo (@NickSzabo4) October 7, 2025
One of the latest narratives in the market is the digital asset treasury (DAT) trend that started back when Strategy announced its first Bitcoin purchase in 2022. Ever since then, companies have started exploring building reserves with smaller tokens, such as ETH.
BitMine Immersion Technologies, led by Fundstrat Chief Investment Officer (CIO) Tom Lee, has become the largest Ethereum treasury holder globally.
Data from StrategicETHReserve shows that BitMine has around 2.83 million ETH on its balance sheet. At ETH’s current price, this puts the value of the company’s holdings at $13.17 billion.
In a recent press release, BitMine said that the total value of its holdings, which includes crypto, cash, and “moonshots” has reached $13.4 billion.
As of Oct. 5, the company held 192 BTC, a $113 million stake in Eightco Holdings, and encumbered cash of $456 million, along with its massive ETH reserves.
One of the next narratives that could make the rounds in the market is the convergence of blockchain and artificial intelligence (AI), according to BitMine.
Lee said in a statement that the company continues to view Ethereum as “one of the biggest macro trades over the next 10-15 years.”
“Wall Street and AI moving onto the blockchain should lead to a greater transformation of today’s financial system. And the majority of this is taking place on Ethereum,” he added.
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