Bitwise Chief Investment Officer Matt Hougan dubbed Ethereum (ETH) the ‘Microsoft of blockchains’, adding that none of the smart contract platform’s challenges are existential.
Ethereum Has Challenges, But None Of Them Are Existential
In a recent memo titled ‘A Contrarian Bet on Ethereum’, Hougan highlighted the tumbling ETH/BTC trading pair, indicating the weakening Ethereum price versus Bitcoin (BTC). At press time, the trading pair is exchanging hands at 0.038, its lowest level in three years.
Compared to some of the other leading digital currencies, ETH hasn’t had an eventful 2024. On a year-to-date basis, Bitcoin is up 38%, while the rival smart contract platform Solana (SOL) is up 31%. Binance’s BNB token has surged by 72% in the same period. However, ETH has remained flat, currently trading at $2,306.
Ethereum’s underperformance in terms of token price, according to Hougan, has made it ‘cool to hate Ethereum right now.’ Hougan noted several factors that might risk the Ethereum ecosystem, including the prospect of Democratic US presidential candidate Kamala Harris winning the election and continuing Biden administration’s suspicious attitude toward everything crypto.
In addition, the Bitwise CIO acknowledged the threats posed by competing blockchain projects, such as Solana, that offer higher throughput and lower transaction costs. He also admitted that ETH exchange-traded-funds (ETFs) haven’t had as much success as Bitcoin ETFs.
Although Hougan acknowledged the success of several Layer-2 solutions such as Base, Arbitrum, and Optimism, he stressed that their success has pulled so much transaction volume from Ethereum that its revenues have crashed to a four-year low. According to Hougan, these reasons are valid but ‘they miss the broader point.’
Hougan stressed that blockchain applications witnessing success in user adoption are all dominated by Ethereum, such as stablecoins and decentralized finance (DeFi). Over 50% of stablecoins are still issued on the ETH blockchain. Similarly, over 60% of DeFi assets are locked in various ETH-powered protocols.
Hougan Remains Bullish On ETH
In the memo, Hougan mentioned that institutional confidence in Ethereum remains high, as seen in asset manager BlackRock’s decision to develop a tokenized money market on Ethereum this year. Similarly, Nike chose Ethereum to launch its Web 3 gear platform called Swoosh.
He noted:
Ethereum has the most active developers, the most active users, and a market cap that is 5x bigger than its closest competitor. It’s the only programmable blockchain that has a modicum of regulatory support in the U.S., with a booming regulated futures market and a multi-billion-dollar ETF market.
To bolster his argument, Hougan compared Ethereum to software juggernaut Microsoft, saying that even though other tech companies like Google, Zoom, and Slack have offered useful services, Microsoft continues to be larger than all of them put together.
Concluding, Hougan said that Ethereum’s opportunities are enormous. As the world inches closer to the November US presidential elections, the market participants may reevaluate the second largest cryptocurrency by market cap. At press time, ETH trades at $2,306, commanding a total market cap of $277 billion.
