Why isn't your Token rising?

Written by: Santiago R Santos

Compiled by: Luffy, Foresight News

Currently, everyone in the crypto industry is focused on the same headline:

Exchange Traded Funds (ETFs) are now live.

Real enterprises are integrating stablecoins.

Regulatory agencies are becoming increasingly friendly.

Aren't these exactly everything we have dreamed of? But why is the price still sluggish? Why has Bitcoin been fluctuating throughout the year, giving back its gains, while the US stock market has risen by 15%-20%? Why, even though “cryptocurrency is no longer a scam” has become a mainstream consensus, are the altcoins you are optimistic about still in a loss state?

Let's have a good talk about this issue.

Adoption rate ≠ price increase

There is a deep-rooted assumption on cryptocurrency Twitter: “Once institutions enter the market, regulations are clear, and JPMorgan issues a token… we will soar.”

Now that institutions have arrived and we have made the headlines, cryptocurrencies are still stuck in place.

The core question in the investment world is: “Have these favorable factors already been reflected in the price?”

This has always been the hardest thing to judge, but market behavior is sending an unsettling signal: we have gotten everything we wanted, yet we have not been able to push prices up.

Can the market be inefficient? Of course, it can. But what is the reason? Because most areas of the cryptocurrency industry have long been severely disconnected from reality.

$1.5 trillion market cap… What is it based on?

Let’s take a step back and look at the bigger picture. Bitcoin stands alone; it is like gold, a perfect symbol of consensus. Currently, the market capitalization of Bitcoin is about $1.9 trillion, while that of gold is about $29 trillion, making Bitcoin's market cap less than 10% of gold. From the perspective of hedging tools and options value, its logic is clear enough.

The total market capitalization of Ethereum, Ripple, Solana, and all other cryptocurrencies is approximately $1.5 trillion, but the narrative foundation behind them is much weaker.

Nowadays, no one questions the potential of this technology, and few believe that the entire industry is a scam; that phase is over.

But potential does not answer the real question: Is an industry with only about 40 million active users really worth a valuation of trillions of dollars?

Meanwhile, there are rumors that OpenAI's IPO valuation is approaching $1 trillion, and its user base is about 20 times that of the entire cryptocurrency ecosystem.

Think carefully about this comparison. Moments like this force us to confront the core question: what is the best way to gain exposure to cryptocurrencies from now on?

Looking back at history: the answer is “infrastructure”. Early Ethereum, early Solana, early DeFi, these types of investments were successful.

But what about today? The pricing of these assets seems to assume that future usage and transaction fees will increase by 100 times. Perfect pricing, but with no margin of safety.

The market is not foolish, it is just greedy.

This round of cycles has given us all the headlines we wanted… but some truths have also become clear:

The market does not care about your narrative; it only cares about the gap between price and fundamentals. If this gap persists over the long term, the market will ultimately stop having illusions about you, especially when you start disclosing revenue data.

Cryptocurrency is no longer the hottest investment target; artificial intelligence (AI) is. Funds chase trends, which is how the modern market operates. Currently, AI is the absolute star, while cryptocurrency is not.

Businesses follow commercial logic rather than ideology. Stripe's launch of the Tempo stablecoin is a warning signal. Perhaps companies will not choose to use public chain infrastructure simply because they heard on Bankless that “Ethereum is the world's supercomputer”; they will only choose the option that is most beneficial to them.

So, just because Larry Fink discovered that “cryptocurrency is not a scam,” does that mean your holdings can rise?

When assets are perfectly priced, a casual remark from Powell or a subtle expression from Huang Renxun could ruin the entire investment logic.

Simple Calculation: Ethereum, Solana, why do returns ≠ profits?

Let's make a rough estimate of the situation of mainstream public chains (L1). First, there are staking rewards (note: this is not profit):

Solana: Approximately 419 million SOL are staked, with an annual yield of about 6%, generating approximately 25 million SOL in staking rewards each year. Based on the current price of about 140 USD per coin, the rewards are worth about 3.5 billion USD per year.

Ethereum: Approximately 33.8 million ETH are staked, with an annual yield of about 4%, generating approximately 1.35 million ETH in staking rewards per year. Based on the current price of about 3100 USD per ETH, the reward's value is approximately 4.2 billion USD per year.

Some people see the staking data and say: “Look, stakers can earn returns! This is value capture!”

No, staking rewards are not value capture. They are token issuance and dilution, and are the cost of network security, not profit.

Real economic value = transaction fees paid by users + tips + maximum extractable value (MEV), which is the closest indicator of “profit” in blockchain.

From this perspective: Ethereum generated approximately $2.7 billion in transaction fees in 2024, ranking first among all public chains. Solana's recent network revenue performance is leading, able to earn hundreds of millions of dollars each quarter.

Therefore, the current market situation is approximately as follows: Ethereum has a market capitalization of about $400 billion, with annual fees + MEV revenue of around $1-2 billion. This means that based on revenue at the peak of the cycle, its price-to-sales ratio (Note: Price-to-sales ratio PS = total market capitalization divided by core business revenue. A lower price-to-sales ratio indicates greater investment value in the company's stock.) can reach as high as 200-400 times.

Solana has a market capitalization of approximately 75-80 billion USD, with an annual revenue exceeding 1 billion USD. Depending on the method of annualization (note: do not use peak month data to extrapolate for the entire year), its price-to-sales ratio is about 20-60 times.

These data are not precise, nor do they need to be. We are not submitting documents to the SEC; we just want to assess whether the valuation is reasonable. And this has yet to touch on the real issue.

The real issue: this is not a recurring income.

These are not stable, enterprise-level revenue streams. They are highly cyclical, speculative “recurrent cash flows”:

Perpetual contract trading

Memecoin speculation

Fees incurred from forced liquidation

MEV Peak Earnings

Frequent inflow and outflow of high-risk speculative funds

In a bull market, transaction fees and MEV will skyrocket; in a bear market, they will disappear in an instant.

This is not the recurring revenue of Software as a Service (SaaS), this is casino revenue in the Las Vegas style.

You wouldn't give a company that “only makes money when the casino is full every 3-4 years” a Shopify-level valuation multiple. This is a different business model and should correspond to different valuation multiples.

Return to fundamentals

Under any reasonable logical framework: Ethereum, with a market value of about $400 billion and an annual revenue (highly cyclical fees) of only $1-2 billion, cannot be considered a value asset.

A price-to-sales ratio of 200-400 times, combined with slowing growth and the value diversion of the Layer 2 ecosystem, means that Ethereum is not like the federal government in a tax system; rather, it resembles a “federal government that can only collect state-level taxes but allows the states (L2) to take away most of the profits.”

We see Ethereum as the 'world computer', but its cash flow performance is seriously inconsistent with its market value. Ethereum feels a lot like Cisco to me: it had an early lead, its valuation multiples are unreasonable, and it may never reach its historical highs again.

In contrast, Solana's relative valuation is not as outrageous; it's not cheap, but it's not at a crazy level either. With a market capitalization of 75-80 billion dollars, it achieves billions of dollars in annual revenue, with a price-to-sales ratio of about 20-40 times. It is still relatively high, and there is still a bubble, but compared to Ethereum, it can be considered “relatively cheap.”

Let's compare the valuation multiples: NVIDIA, the most sought-after growth stock in the world, has a price-to-earnings ratio (Note: The price-to-earnings ratio is one of the most commonly used indicators in stock valuation, used to measure the stock price relative to the company's profitability. The formula is: P/E ratio = Stock price / Earnings per share.) of only 40-45 times, while it has:

Real revenue

Real Profit Margin

Global Enterprise-Level Demand

Continuous contract-based sales

A large customer base outside of cryptocurrency casinos (Fun fact: cryptocurrency miners were the first real driving force behind NVIDIA's rapid growth)

To emphasize again: the revenue of a public chain is cyclical “casino income”, rather than stable and predictable cash flow.

In theory, the valuation multiples of these public chains should be lower than those of technology companies, rather than higher.

If the entire industry's transaction fees cannot shift from “speculative fund turnover” to “real, sustainable economic value,” then the valuation of most assets will be repriced.

We are still in the early stages… but not that kind of early.

One day, the price will realign with the fundamentals, but that time has not yet come.

The current situation is:

There is no fundamental basis to support the high valuation multiples of most tokens.

Once the token issuance and airdrop arbitrage are removed, the value capture ability of many networks will cease to exist.

Most “profits” are linked to speculative activities in casino-like products.

We have built an infrastructure that enables around-the-clock, low-cost, instant cross-border transfers… yet its best use is defined as “slot machines.”

Short-term greed, long-term laziness. Quoting Netflix co-founder Marc Randolph: “Culture is not about what you say, it's about what you do.”

When your flagship product is “Fartcoin 10x Leverage Perpetual Contract”, don't talk to me about decentralization.

We can do better. This is the only way for us to upgrade from a niche casino of excessive financialization to a real, long-term sustainable industry.

The end of the beginning

I don't think this is the end of cryptocurrency, but I believe this is the end of the beginning.

We have invested too much money in infrastructure, with over 100 billion dollars sunk into public chains, cross-chain bridges, Layer 2, and various infrastructure projects, while seriously neglecting application deployment, product development, and acquiring real users.

We always brag:

Transactions Per Second (TPS)

block space

Complex Rollup Architecture

But users don't care about these at all. They only care about:

Is the cost lower?

Is the speed faster?

Is it more convenient to use?

Can it really solve their problems?

Return to cash flow, return to unit economic benefits, return to the essence: Who are the users? What problems are we solving?

Where is the real growth potential?

For over ten years, I have been a staunch bull on cryptocurrency, and that has never changed.

I still believe:

Stablecoins will become the default payment channel.

Open and neutral infrastructure will support global finance behind the scenes.

Companies will adopt this technology because it aligns with economic logic rather than ideology.

But I don't think the biggest winners in the next decade will be today's mainstream public chains or Layer 2.

History has proven that the winners of each technological cycle emerge at the user aggregation layer, not the infrastructure layer.

The internet has reduced computing and storage costs, but wealth ultimately flows to companies like Amazon, Google, and Apple, which serve billions of users using cheap infrastructure services.

Cryptocurrencies will also follow a similar logic:

The blockchain space will become a commodity.

The marginal benefits of infrastructure upgrades will become increasingly lower.

Users are always willing to pay for convenience.

User aggregators will capture most of the value.

The biggest opportunity right now is to integrate this technology into established enterprises. By eliminating the financial pipelines of the pre-internet era and replacing them with cryptocurrency infrastructure, as long as it can genuinely reduce costs and improve efficiency, just like the internet quietly upgraded all industries from retail to industrial.

The reason why enterprises adopt the Internet and software is that it aligns with economic logic. Cryptocurrency is no exception.

We can wait another ten years for everything to happen naturally. Or, we can start taking action now.

Update cognition

So, where do we go from here? The technology is viable, the potential is enormous, and we are still in the early stages of real adoption.

It would be wise to reassess everything:

Evaluate network value based on real usage rates and fee quality, rather than ideology.

Not all fees are equivalent: distinguish between sustainable income and repeated capital flow.

The winners of the last decade will not dominate the next decade.

Stop viewing token prices as a scoreboard for technical validity.

We are still at such an early stage that we still regard token prices as a measure of whether the technology works. But no one would choose AWS over Azure just because Amazon or Microsoft's stock went up that week.

We can wait another ten years for companies to proactively adopt this technology. Or, we can start taking action now to put real Gross Domestic Product (GDP) on the blockchain.