Andrew Kang angrily criticized Tom Lee: The Wall Street long positions theory on ETH is the "stupidest" I have ever seen!

Original Title: Tom Lee's ETH Thesis is Retarded

Original author: Andrew Kang, Partner at Mechanism Capital

Compiled by: White55, Mars Finance

Wall Street renowned analyst Tom Lee's bullish theory on Ethereum is facing the most intense criticism in the industry, as Mechanism Capital partner Andrew Kang refutes its logical flaws one by one.

"Tom Lee's ETH theory is the dumbest I've seen among well-known analysts recently, completely lacking in financial common sense." The criticism from Andrew Kang, a partner at Mechanism Capital, is sharp as a knife, directly targeting Wall Street's prominent analyst Tom Lee's bullish view on Ethereum.

This debate stems from Tom Lee's recent strong advocacy for the Ethereum "Three-Body Superposition Theory." He believes that the three major trends of financial on-chain, the explosion of stablecoins, and AI intelligence will converge in the Ethereum ecosystem, driving the price of ETH to reach $10,000-15,000 before the end of 2025, and possibly even $60,000 in the long term.

The following is the original content by Andrew Kang.

In the financial analyst articles I have read recently, Tom Lee's ETH theory is considered "one of the dumbest." Let's analyze his viewpoints one by one, as Tom Lee's theory is mainly based on the following key points.

· Adoption of stablecoins and RWA (real world assets);

· Analogous to "digital oil";

· Institutions will purchase and stake ETH, providing security for the network where its assets are tokenized, as well as serving as operating capital;

· ETH will be equivalent to the total value of all financial infrastructure companies;

· Technical analysis;

1. The Adoption of Stablecoins and RWA

Tom Lee's argument suggests that the increase in stablecoins and asset tokenization activities will drive up trading volumes, thereby boosting ETH's fee income. On the surface, this seems reasonable, but a few minutes of data checking reveals that this is not the case.

Since 2020, the value of tokenized assets and the trading volume of stablecoins have increased by 100 to 1000 times. However, Tom Lee's argument fundamentally misinterprets Ethereum's value accumulation mechanism—he leads people to believe that network fees will rise year-on-year, but in reality, Ethereum's fee revenue has remained at 2020 levels.

The reasons for this result are as follows:

· The Ethereum network will enhance transaction efficiency through upgrades;

· Stablecoins and asset tokenization activities will flow to other public chains;

· The fees generated from tokenizing low liquidity assets are negligible – the tokenized value is not directly proportional to ETH income. People might tokenize a 100 million dollar bond, but if it only trades once every two years, how much in fees could that bring to ETH? It might only be 0.1 dollars, which is far less than the fees generated from a single USDT transaction.

You can tokenize assets worth trillions of dollars, but if these assets are not traded frequently, it may only add $100,000 in value to ETH.

Will the blockchain transaction volume and fees increase? Yes.

However, most of the transaction fees will be captured by other blockchains that have stronger business development teams. In the process of moving traditional financial transactions to the blockchain, other projects have seen this opportunity and are actively capturing the market. Solana, Arbitrum, and Tempo have all achieved some early victories, and even Tether is supporting two new stablecoin public chains (Plasma and Stable), hoping to shift the trading volume of USDT to their own chains.

2. The analogy of "digital oil"

Oil is essentially a commodity. The real price of oil, adjusted for inflation, has remained within the same range for a century, occasionally fluctuating and then returning to its original position.

I partially agree with Tom Lee's view that ETH can be considered a commodity, but that does not imply a bullish outlook. I'm also not quite sure what Tom Lee is trying to express here.

Third, the institution will purchase and stake ETH, which provides security for the network and can also serve as operating capital.

Have large banks and other financial institutions already bought ETH into their balance sheets? No.

Do they have plans to buy ETH? No, they don't.

Will banks hoard gasoline barrels because of constantly paying energy costs? No, the costs are not significant enough; they will only pay when necessary.

Will banks buy shares of the asset custodians they use? No.

4. ETH will be equivalent to the total value of all financial infrastructure companies.

I'm really speechless. This is yet another fundamental misunderstanding of value accumulation, purely a fantasy, and I can't even be bothered to criticize it.

5. Technical Analysis

I personally really like technical analysis and believe that when viewed objectively, technical analysis can indeed provide a lot of valuable information. Unfortunately, Tom Lee seems to be misusing technical analysis to draw lines arbitrarily to support his biases.

Objectively examining this chart, the most obvious feature is that ETH is in a prolonged range of fluctuations for several years—similar to the wide range oscillation pattern of crude oil prices over the past thirty years—only in a range oscillation. Recently, it has even tested the upper limit of the range but failed to break through the resistance. From a technical perspective, ETH is showing bearish signals, and the possibility of it oscillating long-term in the range of 1000 - 4800 USD cannot be ruled out.

Just because an asset has experienced a parabolic rise in the past does not mean that this trend will continue indefinitely.

The long-term ETH/BTC price chart has also been misinterpreted. While it is indeed in a multi-year consolidation range, it has been overall constrained by a downward trend over the past three years, with the recent rebound only reaching the long-term support level. This downward trend stems from the narrative around Ethereum becoming saturated, and the fundamentals cannot support valuation growth. These fundamental factors have not changed substantively to this day.

The valuation of Ethereum is essentially a product of financial cognitive deficiencies. Fairly speaking, this cognitive bias can indeed support a considerable market capitalization (see XRP), but its supporting power is not infinite. Macroeconomic liquidity has temporarily maintained the market capitalization level of ETH, but unless a significant structural change occurs, it is likely to fall into a prolonged underperformance predicament.