Is ETH a ‘Contrarian Bet’? Bitwise CIO Says Don’t Write Off the ‘Microsoft of Blockchains’ Just Yet

Things are looking good for Bitcoin, Ethereum and Co right now. Following the recent Fed rate cut of 50 basis points – the first cut in four years – all top crypto projects have made gains, with the price of ETH increasing by 3.42% in the past 24 hours.

Related: Chainalysis: East Asian Crypto Adoption Driven by Institutions

Despite this, not all is sunshine and roses for Ethereum. Early September marked the annual low for the second-largest crypto by market cap. Although at the time of writing, the price of ETH had recovered by over 14% from the low of US$2,169 (AU$3,185), currently trading for US$2,464 (AU$3,618).

More Pain For ETH? Analyst Says Don’t Be Too Quick to Judge

Bitwise Asset Management’s chief investment officer (CIO), Matt Hougan, admits ETH is not getting much love right now.

It’s cool to hate Ethereum right now. I bet this ends up looking silly. No one likes Ethereum right now.

Matt Hougan, Bitwise

In a recent blog post, Hougan pointed out that Ether hit a 42-month low against King Bitcoin on 16 September, flatlining on a year-to-date basis, while Bitcoin (+38%) and Solana (+31%) are up.

And there’s more potential trouble for Ethereum, according to the CIO. For one, the US elections are important, because if Harris wins and continues Biden’s stance, it might not matter much to Bitcoin, but it could to Ethereum.

The SEC appears to think that staked ETH is a security, and the agency has significant worries about the broader DeFi ecosystem that drives much of Ethereum’s value.

Matt Hougan, Bitwise

Then, there’s also competition with Solana and other newer blockchains, the “challenged tokenomics” as Hougan calls it – as the community focuses more on layer-2s than Ethereum itself – and of course the so far lacklustre ETF results.

But Hougan also thinks it’s not all that bad:

These are good reasons to be concerned. But I think they miss the broader point.

Matt Hougan, Bitwise

Ethereum Still Has a Lot Going for It – Is Like Microsoft of Blockchains

In fact, Hougan believes that being a bit of a “contrarian bet”, ETH still has much potential, he wrote that “none of Ethereum’s challenges seem existential, and its opportunities are brimming”.

Some hard and fast facts, according to Hougan:

More than half of all stablecoins are on Ethereum, over 60% of DeFi happens there and Polymarket ultimately settles on the OG smart-contract platform as well.

Related: On the Radar – Coins to Watch: OM and AAVE

Additionally, the CIO highlights that BlackRock, Nike, and other major companies are increasingly choosing Ethereum for their blockchain ventures due to its dominant market position.

With the most active developers, a large user base, and a market cap significantly surpassing its rivals, Ethereum “has a modicum of regulatory support in the U.S., with a booming regulated futures market and a multi-billion-dollar ETF market”.

It’s like the Microsoft of blockchains. Everyone wants to talk about Google and Slack and Zoom, and with good reason: Each of them has brought game-changing technology to the market. But Microsoft is still larger than all of them put together.

Matt Hougan, Bitwise