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Bitwise Chief Investment Officer Matt Hougan called Ethereum (ETH) the ‘Microsoft of blockchains’, adding that there are no challenges to the existing smart contract platform.
Ethereum Has Challenges, But None Of Them Are Extant
The latest memo titled ‘A Contrarian Bet on Ethereum’, Hougan highlighted the falling ETH/BTC trade, which shows the weakness of the price of Ethereum compared to Bitcoin (BTC). At press time, the trading pair is trading at 0.038, the lowest level in three years.
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Compared to other leading digital currencies, ETH did not have an eventful 2024. Over the past year, Bitcoin is up 38%, while rival smart contract platform Solana (SOL) is up 31%. Binance’s BNB token rose 72% during the same period. However, ETH has remained low, currently trading at $2,306.
Ethereum’s underperformance in terms of token value, according to Hougan, has made it ‘cool to hate Ethereum right now.’ Hougan noted several factors that could threaten the Ethereum ecosystem, including the prospect of Democratic presidential candidate Kamala Harris winning the election and the continued suspicious attitude of the Biden administration towards everything crypto.
In addition, the Bitwise CIO acknowledged the threats posed by competing blockchain projects, such as Solana, which offer high throughput and low transaction costs. He also admitted that ETH exchange-traded-funds (ETFs) I didn’t has had the same success as Bitcoin ETFs.
While Hougan acknowledged the success of several Layer-2 solutions such as Base, Arbitrum, and Optimism, he emphasized that their success has driven the volume of transactions in Ethereum to such an extent that revenue crashed to the lower four years. According to Hougan, these reasons are true but they ‘miss the broader point.’
Hougan stressed that blockchain applications that are proving successful in user adoption are all controlled by Ethereum, such as stablecoins and decentralized currencies (DeFi). More than 50% of stablecoins are still issued on the ETH blockchain. Likewise, more than 60% of DeFi assets are locked into 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 an Ethereum token currency market this year. Similarly, Nike chose Ethereum to launch its Web 3 gear platform called the Swoosh.
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He commented:
Ethereum has the most active developers, the most active users, and a market cap 5x larger than its nearest competitor. It is the only programmable blockchain with minimal regulatory support in the US, with a thriving regulated futures market and multi-billion dollar ETF market.
To bolster his argument, Hougan compared Ethereum to software juggernaut Microsoft, saying that while other tech companies like Google, Zoom, and Slack have provided useful services, Microsoft continues to be the largest combined.
In conclusion, Hougan said that Ethereum’s opportunities are huge. As the world approaches the US presidential election in November, market participants may re-evaluate the second largest cryptocurrency by market cap. At press time, ETH is trading at $2,306, commanding a market capitalization of $277 billion.
Featured image from Unsplash, Chart from Tradingview.com