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Matt Hougan, Bitwise's chief investment officer, called 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 ethereum?utm_medium=email&_hsmi=325026337&utm_content=325026337&utm_source=hs_email” target=”_blank” rel=”nofollow”>memorandum In the article titled “A Contrarian Bet on ethereum,” Hougan highlighted the decline of the eth/btc pair, indicating the weakening of the ethereum price against bitcoin (btc). At the time of writing, the pair was trading at 0.038, its lowest level in three years.
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Compared to some of the other leading digital currencies, eth hasn’t had an eventful 2024. Year-to-date, bitcoin is up 38%, while rival smart contract platform Solana (SOL) is up 31%. Binance’s BNB token has surged 72% in the same period. However, eth has remained stable and is currently trading at $2,306.
According to Hougan, ethereum’s poor performance in terms of token price has made it “cool to hate ethereum right now.” Hougan pointed to several factors that could put the ethereum ecosystem at risk, including the possibility of US Democratic presidential candidate Kamala Harris winning the election and the Biden administration’s continued suspicious attitude toward all things crypto.
Additionally, Bitwise's CIO acknowledged the threats posed by competing blockchain projects such as Solana, which offer higher throughput and lower transaction costs. He also admitted that eth exchange-traded funds (ETFs) don't have was as successful 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 attracted so much transaction volume from ethereum that their revenue has crashed to its lowest level in four years. According to Hougan, these reasons are valid but “overlook the bigger picture.”
Hougan highlighted that blockchain applications that are seeing success in user adoption are dominated by ethereum, such as stablecoins and decentralized finance (DeFi). More than 50% of stablecoins are still issued on the eth blockchain. Similarly, more than 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 apparel platform called Swoosh.
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He noted:
ethereum has the most active developers, the most active users, and a market cap five times that of its closest competitor. It is the only programmable blockchain that has minimal regulatory support in the US, with a booming regulated futures market and a multi-trillion dollar ETF market.
To bolster his argument, Hougan compared ethereum to software giant Microsoft, saying that while other tech companies like Google, Zoom and Slack have offered useful services, Microsoft is still bigger than all of them combined.
In conclusion, Hougan said that ethereum's opportunities are huge. As the world approaches the US presidential election in November, market participants can re-evaluate The second-largest cryptocurrency by market cap. At the time of writing, eth is trading at $2,306, representing a total market cap of $277 billion.
Featured image from Unsplash, chart from Tradingview.com
