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.
Bitwise Chief Investment Officer Matt Hougan has likened Ethereum (ETH) to the “Microsoft of blockchains,” asserting that none of the smart contract platform's challenges pose an existential threat.
In a recent memo titled “A Contrarian Bet on Ethereum,” Hougan highlighted the tumbling ETH/BTC trading pair, which indicates the weakening Ethereum price relative to Bitcoin (BTC). At press time, the trading pair is exchanging hands at 0.038, marking its lowest level in three years.
As compared to some of the other leading digital currencies, ETH has not had a particularly 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 relatively 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 could potentially imperil the Ethereum ecosystem, including the possibility of Democratic US presidential candidate Kamala Harris winning the election and continuing the Biden administration's skeptical stance towards all things crypto.
Furthermore, the Bitwise CIO acknowledged the threats posed by competing blockchain projects, such as Solana, which offers higher throughput and lower transaction costs. He also admitted that ETH exchange-traded-funds (ETFs) have not seen as much success as Bitcoin ETFs.
While Hougan conceded 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 points are valid but “they miss the broader point.”
Hougan highlighted the fact that blockchain applications which are seeing the most success in terms of user adoption are all dominated by Ethereum, such as stablecoins and decentralized finance (DeFi). More than 50% of all 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 as evidenced by the recent institutional interest in the cryptocurrency. This includes asset manager BlackRock which is developing a tokenized money market on Ethereum this year and Nike which chose Ethereum to launch its Web 3 gear platform called Swoosh.
“Ethereum has the most active developers, the most active users, and a market cap that is 5x bigger than its closest competitor,” noted Hougan. “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 further drive home his point, 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 combined.
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