Ethereum (ETH-USD) is in full focus following several tweets from acclaimed short-seller Citron Research. The tweets are Citron’s first since May 17. Meanwhile, the price of ETH has plummeted by more than 40% in the past month as declining market conditions and rising rates batter the second-largest cryptocurrency.
Andrew Left, Citron’s Founder, did not release an official short report on Ethereum. Instead, the firm chose to address the cryptocurrency through a series of tweets, explaining:
“Anyone who thinks smart contracts and DAO are going to replace escrows and banks has obviously never conducted real business.”
Let’s get into the details.
Citron Believes Ethereum Is “Still Expensive” at $200
In regards to ETH, Citron wrote, “Sometimes it becomes just too difficult not to bite your tongue and not chime in on the obvious.” Citron backs up its point by stating even high-growth software and cloud companies have reverted back to their pre-pandemic levels.
Before March 2020, Ethereum was trading at $200, which the short seller acknowledges as “still expensive.” Today, Ethereum trades above $1,000 with a market capitalization of about $134 billion.
Citron cites a CNBC appearance by Mike Novogratz, CEO of Galaxy Investment Partners, a cryptocurrency investment firm. In regards to crypto use cases, the “first and only thing” he mentions is the ability to buy collectibles, or non-fungible tokens (NFTs).
Citron compares Ethereum to a high-growth software company worth $140 billion. The firm explains if the company’s primary use case is to buy these collectibles, “then [the] joke will be on you.” In this case, “you” refers to people who purchase Ethereum.
The short seller states Ethereum has never passed his “intellectual honestly [sic] smell test,” despite billions of dollars poured into crypto and Web 3.0 opportunities by venture capitalist (VC) groups. Last year, VC firms collectively invested more than $30 billion into crypto companies. Citron calls out these companies and states they will “never be held accountable for the claims that have been sold to the unsuspecting public over past few years.”
Citron concluded its series of tweets by jokingly exclaiming, “But I know…..we just don’t understand !!!”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.