Jeff Dorman, chief investment officer (CIO) of crypto investment firm Arca, argued that the fundamental reason for the discrepancy between prices and actual adoption in the crypto market is that the largest assets by market capitalization are weak in terms of investment value.
Dorman said the fact that the sector is highly dependent on four major assets makes it difficult to develop a sound valuation mechanism in the market.
Dorman criticized Bitcoin, Ethereum, Solana, etc. $XRPone of the largest crypto assets by market capitalization.
Dorman said one of the most significant risks to Bitcoin is the threat of quantum computing, adding that while technological solutions are possible, implementing such changes from a governance perspective can be difficult.
He also argued that Bitcoin is now controlled by large institutional investors and is therefore no longer a “cool” asset. According to Dorman, the presence of alternatives such as tokenized gold in the market weakens Bitcoin’s “digital gold” narrative. He further stated that the proliferation of derivative and structured financial products has lessened the impact of the 21 million supply constraint, and that Bitcoin is no longer used as a strong hedge against inflation or as a widely accepted means of payment.
Regarding Ethereum and Solana, he pointed to high inflation and value capture issues. Dorman said the network’s fee income is not enough to offset token inflation. Additionally, excessive block space compared to current usage levels and increased competition from new layer 1 networks make it difficult for these projects to justify their current market capitalizations. Nevertheless, Dorman said that while Ethereum and Solana both have strong potential for ecosystem growth, this growth may not be directly reflected in the coin’s price.
Regarding $XRPDorman was more critical, arguing that the token design was weak and lacked a strong direct economic link to Ripple. He claimed that Ripple spent billions of dollars from the sale. $XRP We carry out stock buybacks every year.
Dorman said the weakness in the sector’s largest asset means the crypto market is more attractive to short-term traders and macro funds than investors focused on fundamental analysis. This situation increases the discrepancy between crypto prices and real-world use cases, he said.
However, Dorman also emphasized that the sector does not have an entirely negative image. According to the analyst, the fastest growing areas for the use of cryptocurrencies and blockchain fall into three areas: stablecoins and payment systems, decentralized finance (DeFi), and real-world asset tokenization (RWA). He said projects developed in these areas can directly gain value from the practical adoption of blockchain technology.
*This is not investment advice.
