Mechanism Capital's Andrew Kang Criticizes ETH Bullish Arguments

According to BlockBeats, Andrew Kang, a partner at Mechanism Capital, has publicly criticized Tom Lee's bullish arguments on Ethereum (ETH), describing them as lacking financial insight. Kang systematically refuted several of Lee's points regarding ETH's market prospects. Kang challenged the notion that stablecoin and real-world asset (RWA) adoption would drive ETH's growth. He argued that while Ethereum's network upgrades have improved transaction efficiency, stablecoin and tokenization activities are increasingly moving to other blockchains. He noted that the fees generated from tokenizing low-liquidity assets are negligible, citing a $100 million bond that trades twice in two years, generating only about $0.1 in fees. He also dismissed the analogy of ETH as 'digital oil,' pointing out that oil prices, adjusted for inflation, have remained within the same range for a century. Viewing ETH as a commodity does not provide a bullish rationale. Regarding institutional staking, Kang stated that major banks have not included ETH in their balance sheets nor announced plans to do so. He explained that banks do not stockpile gasoline due to ongoing energy needs; they purchase as needed when demand is minimal. Similarly, banks do not invest in the custodians of assets they use. Kang criticized the comparison of ETH's value to the total value of financial infrastructure companies, calling it a misunderstanding of value accumulation mechanisms. From a technical analysis perspective, Kang observed that Ethereum has been in a multi-year consolidation range and recently failed to break resistance after reaching the range's upper limit. He noted that the ETH/BTC chart has been mostly declining in recent years, with fundamentals not supporting valuation growth. Kang attributed Ethereum's valuation primarily to a lack of financial knowledge, similar to XRP, but emphasized that such valuation is not limitless. He concluded that while macro liquidity supports ETH's market capitalization, it will continue to underperform without significant changes.