Ethereum Letters (2020)
Ethereum Letters was written in early 2020, when Ethereum’s market role, economic design, and long-term relevance were still highly uncertain. Ethereum had a shorter trading history than Bitcoin, greater narrative dispersion, and significantly higher volatility. The objective of this report was not to make strong directional claims, but to examine whether a risk-aware, macro-style framework could be applied to an asset with more complex and changing drivers.
The analysis treats Ethereum as fundamentally different from Bitcoin. Rather than assuming ETH would simply behave as a higher-beta version of BTC, the report examines Ethereum through multiple dimensions of risk, including relative performance versus Bitcoin, drawdown behavior, and sensitivity to broader market conditions. Particular attention is paid to ETH/BTC dynamics, which often provide more actionable information than absolute price levels.
A consistent motif throughout the report is model uncertainty. The analysis explicitly acknowledges the limitations imposed by Ethereum’s shorter history and rapidly changing utility. As a result, conclusions are framed probabilistically rather than deterministically, with an emphasis on how Ethereum’s higher volatility and narrative-driven flows can amplify both upside and downside depending on the prevailing risk regime.
The report also highlights the importance of relative positioning and risk dispersion within crypto markets. Ethereum’s potential upside has historically been accompanied by wider outcome distributions, making exposure decisions more sensitive to market structure, liquidity conditions, and behavioral excess.
Since its publication, Ethereum has undergone substantial structural changes, including major protocol upgrades, shifts in fee dynamics, and increased institutional engagement. These developments would warrant a different analytical emphasis today. However, the core takeaway remains intact: assets with greater innovation optionality also tend to exhibit greater regime dependence and higher risk dispersion, particularly during periods of tightening financial conditions.
Ethereum Letters is included here as part of the historical development of a framework-first approach to crypto analysis, indicating how risk management principles were applied to emerging assets before their long-term market roles were fully defined.