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Samson Mow, CEO of JAN3 and a known Bitcoin advocate, has raised concerns about the growing concentration of South Korean retail capital in Ethereum treasury companies. According to Mow, over $6 billion in retail investment from South Korea is currently supporting these firms, with BitMine, the largest among them, holding over $2.65 billion worth of Ethereum.
Recent data indicate a clear trend among Korean retail investors shifting away from traditional equities, such as Tesla, Apple, and Alphabet, to cryptocurrencies. In August alone, Korean investors sold $657 million of Tesla stock while putting $269 million into BitMine. This latest move is driven by aggressive marketing tactics, public events, and comparisons to high-profile corporate Bitcoin purchases, such as MicroStrategy's accumulation of BTC.
Mow stresses that many of these retail investors aren't looking at the Ethereum to Bitcoin (ETHBTC) trading pair chart, which has displayed a long-term downtrend since mid-2022. Ethereum's performance relative to Bitcoin has been ongoing within a multi-year range, with short-term rallies not establishing sustained upward momentum.
According to Mow, the current investment strategy overlooks these technical indicators and instead relies on narratives that promote Ethereum as the next store of value in the cryptocurrency space.
Furthermore, Mow suggests that the perceived strength of Ethereum treasury companies should not be interpreted based on market fundamentals. He observes that the capital surge is driven mainly by speculative enthusiasm rather than solid financial analysis or a clear understanding of Ethereum's role in the broader digital asset ecosystem. This, he warns, could lead to significant losses if the current trend continues.
Despite concerns, Ethereum currently remains strongly bullish, driven by increasing institutional demand, particularly with the launch of spot Ethereum ETFs. Weekly inflows of over $1.3 billion have also reversed the previous week's outflows, and ETF assets now surpass $30 billion.
In addition, this influx signifies heightened investor confidence, corroborated by increasing open interest in Ethereum futures and unprecedented trading volumes, reflecting optimism regarding Ethereum's long-term prospects.
Ethereum price is currently at $4,572, having broken key levels of resistance and moved above its 50-week and 100-week EMAs (an indicator of sustained upward movement). Analysts propose that if Ethereum continues its current course, it may soon attempt to challenge the $ 5,000 resistance level, with the prospect of further gains up to $6,250.
Andrew Kang, co-founder of Mechanism Capital, has echoed Mow's concerns. Kang took issue with some recent bullish forecasts about Ethereum, especially a statement made by Tom Lee of Fundstrat, who forecasted ETH to reach $30,000.
Kang deemed Lee's analysis financially and technically unsound. He also countered the argument that the introduction of stablecoins and real-world assets (RWAs) would dramatically increase Ethereum transaction fees. Nevertheless, transaction fees have not grown significantly despite the increase in transaction volume.
Kang also questioned the narrative of comparing Ethereum to "digital oil," saying that analogies between these assets and oil aren't necessarily bullish. He mentioned the absence of institutional accumulation of ETH for staking or security purposes as a signal that Ethereum's long-term value proposition remains uncertain.
The idea that ETH's price might represent the total market value of the world's financial infrastructure was described as a fundamental misunderstanding of how value is built up in crypto markets.
Kang and Mow both warn that a lack of clear understanding of Ethereum’s market dynamics and technical signals could expose retail investors to considerable risks due to the increasing capital flowing into ETH treasury companies.
