Debate erupts over crypto’s network effects as investors question L1 value

💡 DMK Insight

Santiago Roel Santos’ claim that crypto is overpriced due to a lack of network effects raises eyebrows, but here’s the kicker: L1 networks are showing signs of real traction. While Santos points to a disconnect between price and utility, many Layer 1 (L1) blockchains are experiencing growth in user adoption and transaction volume, which could indicate emerging network effects. For traders, this means that dismissing crypto as a bubble might overlook the underlying fundamentals that could support price stability or growth. Watch for metrics like active addresses and transaction counts on major L1s like Ethereum and Solana, as these can signal whether network effects are indeed taking hold. If these metrics continue to rise, it could validate the bullish case against Santos’ bearish outlook. But don’t ignore the risks—if the market sentiment shifts or regulatory pressures mount, we could see a quick reversal. Keep an eye on key support levels in major cryptocurrencies, as a break below these could trigger panic selling. The next few weeks will be crucial for gauging whether these network effects can translate into sustained price action.