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Ethereum Is the Microsoft of Blockchains, ETH Underperformance May Reverse Into Year-End: Bitwise

Sep 17, 2024
  • Despite recent underperformance, ether is potentially a contrarian bet into the year-end, the report said.
  • Bitwise noted that the majority of stablecoins are issued on the Ethereum blockchain and more than 60% of all DeFi assets are locked on the network.
  • Ethereum is like the Microsoft of blockchains, the asset manager said.
As an analyst with over two decades of experience in the tech and financial industries, I have seen my fair share of market trends and shifts. From Microsoft’s dominance in the 90s to the rise of Google, Amazon, and now cryptocurrencies, I have always been drawn to the underdog that shows promise for long-term growth.In simpler terms, although Ether (ETH), the second-largest digital currency, doesn’t seem popular at the moment, its poor performance this year might improve before the year ends, according to a report released by Bitwise on Tuesday.
The asset manager noted that year-to-date ether is little changed, while bitcoin (BTC) is up 38% and Solana’s sol (SOL) has risen 31%.

Ether’s recent struggles are due to several factors: uncertainties surrounding the U.S. presidential election in November, increasing competition from blockchains like Solana, issues with its token economics, and a divided reaction to the launch of spot exchange-traded funds (ETFs) in the U.S., according to the report.

Nonetheless, things aren’t entirely bleak. A large proportion, roughly 60% or more, of stablecoins are issued on Ethereum. Moreover, a significant chunk of decentralized finance (DeFi) assets is locked onto this blockchain. Additionally, the widely-used prediction market platform, Polymarket, carries out its settlements on the primary chain as well, according to Bitwise’s observations.

According to Matt Hougan, the chief investment officer at Bitwise, Ethereum boasts the highest number of active developers, the greatest number of active users, and a market capitalization that is five times greater than its nearest rival.

In simpler terms, Hougan wrote that just like Microsoft dominates the software industry, these new blockchain companies are similar to Microsoft in their field. While everyone is excited about newer tech firms such as Google, Slack, Zoom, it’s important to remember that Microsoft remains larger than all of them combined.

It seems that Ether’s difficulties are not life-threatening, and there might be a reassessment of its value in relation to the upcoming U.S. election. The report suggests it could be advantageous to make a counter-intuitive investment decision towards the end of the year.

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2024-09-18 12:21