Ethereum is being swarmed by sharks.
Earlier this year, Kevin O’Leary, the Canadian investor best known for his position as “Mr. Wonderful” on the reality competition show “Shark Tank,” announced that he was changing his mind about cryptocurrencies.
After the network’s London upgrade, which began putting deflationary pressure on ETH’s price last week, he’s now heading directly for the crypto asset.
According to O’Leary, who appeared on Cameo, an app that allows users to pay celebrities to record short videos, “If Bitcoin is sound money because of the 21 million coin supply ceiling, Ethereum enjoys the same benefit now,” ETH, in what amounts to a sponsored advertisement for the cryptocurrency, is described as “ultra-sound money” since “there is no supply floor.”
Mr. Wonderful talks about #ethereum #EIP1559
and #EIP3675 (the merge) and
Ethereum becoming cashflow positive and
https://t.co/VLOOtk2Wyu pic.twitter.com/lzTNCq1rtU
— Taras.eth | Taras Bobrovytsky (@TarasBob) August 9, 2021
He was referring to the consequences of EIP-1559, a code update included in last Thursday’s London hard fork that altered the network’s pricing structure. Fees are no longer distributed to miners; instead, they are returned to the network and subsequently destroyed, or otherwise removed from circulation permanently.
The price of ETH has increased by 21 percent in the last seven days, as the rate of supply growth slows (about 18,600 ETH ($59 million) have been burned since Thursday), and the supply growth rate is slowing.
This is similar to when a firm becomes lucrative, with more revenue coming in than expenses going out, according to the shark. Using profits as fuel, he argued, is the equivalent of paying out a stock dividend to shareholders.
As the cryptocurrency’s market capitalization grew in the second half of 2020 and reached a peak in early 2021, O’Leary, like several other prominent investors, openly reversed his view on the cryptocurrency.
On the record as calling Bitcoin “hot garbage” in 2019, he switched to an investing strategy in March that included putting 3 percent of his portfolio into Bitcoin and the cryptocurrency Ethereum.
Mr. Wonderful’s co-star, Dallas Mavericks owner Mark Cuban, is also a staunch supporter of the Ethereum cryptocurrency network. During an interview with podcast host Laura Shin in April, Cuban stated, “Obviously with EIP 1559, everything changes.
What happens going forward is going to really impact how people perceive it specifically as a store of value.” Cuban was making the larger point that Ethereum already has utility due to the presence of NFTs and smart contracts on the network; EIP-1559 reinforces its use as a store of value.
The consequences of EIP-1559 are still being investigated, according to some who are not associated with the traditional investment industry.
In a tweet, former Zcash Executive Director Josh Cincinnati said, “I think EIP-1559 is quite cool but anyone making predictions about ETH supply thanks to EIP-1559 is going to be proven wrong—in any direction,”
Realtalk I think EIP-1559 is quite cool but anyone making predictions about ETH supply thanks to EIP-1559 is going to be proven wrong — in any direction.
— Josh Cincinnati (@acityinohio) August 8, 2021
“The uncertainty around the hard fork in general is likely putting downward pressure on the market right now,” Taylor Monahan, CEO of wallet provider MyCrypto, told Decrypt ahead of EIP-1559 last week.
That’s partially because network developers aren’t done innovating; the blockchain is changing consensus mechanisms in the coming months. “If the hard fork occurs and everyone thrives, that pressure should alleviate in the weeks following the fork. Until people start to think about ETH2 or whatever the next scary thing is.”
