• Bloomberg Intelligence’s crypto market analyst Jamie Coutts predicts that Ethereum competitors are likely doomed due to their abysmal second-quarter financials.
• He compares the situation to “zombie” companies on the stock market, where high inflation and low demand lead to negative profitability.
• Coutts believes that only a few layer-1 blockchains will survive and thrive under the new rates regime.
Ethereum (ETH) Competitors in Trouble
Bloomberg Intelligence’s crypto market analyst Jamie Coutts has issued a warning about Ethereum (ETH) competitors, predicting that they might soon fizzle out. Couts shared his analysis with his 5,938 X followers after reviewing the second quarter of this year’s financials for ETH competitors, which he says show abysmal performance.
Comparing Cryptocurrency Projects To ‘Zombie’ Companies
Coutts draws parallels between “zombie” companies traded on the stock market and layer-1 blockchain projects, noting that both have seen their demand plummet recently. According to him, there is insufficient demand (fees) combined with high inflation leading to negative profitability for these projects, making it unlikely that most of them will continue to exist in the future.
High Interest Rates Making Speculative Investments Unattractive
The crypto analyst also pointed out that investors may be attracted by potential growth when it comes to zombie companies and layer-1 blockchain projects alike. However, he believes that with current Federal Reserve interest rates being so high, such speculative investments become less appealing – meaning many layer-1 blockchains may not survive in the long run.
Ethereum Pulling In Profits While Competitors Struggle
Coutts provided a chart showing how Ethereum managed to make more than $500 million in profits during Q2 of 2023 while other layer-1 projects saw a decline of more than $1.5 billion during this period. This is further evidence of how some blockchain projects are doing better than others under current economic conditions.
Conclusion: Only A Few Layer-1 Blockchains Will Survive
Ultimately, Coutts believes only a few layer-1 blockchains will survive and thrive under existing economic conditions – meaning many others will need to change course or risk falling behind completely.