Bitwise Chief Investment Officer Matt Hougan recently branded Ethereum (ETH) as the ‘Microsoft of blockchains,’ asserting that despite its challenges, none of them pose an existential threat. Hougan addressed these viewpoints in a memo titled ‘A Contrarian Bet on Ethereum,’ where he observed the declining ETH/BTC trading pair, which currently hovers at 0.038—its lowest in three years.
Although other major digital currencies have shown significant performance in 2024, Ethereum has lagged behind. Bitcoin has surged 38%, Solana (SOL) has increased 31%, and Binance’s BNB token has seen a remarkable 72% rise. In contrast, Ethereum has remained stagnant, currently trading at $2,306.
According to Hougan, Ethereum’s underperformance in terms of token price has fostered a negative sentiment towards it. Factors contributing to this include the potential election of Democratic US presidential candidate Kamala Harris, who may continue the Biden administration’s cautious stance on cryptocurrencies. Additionally, rival blockchain projects like Solana, which offer higher throughput and lower transaction costs, pose significant threats.
Hougan also pointed out that unlike Bitcoin ETFs, ETH exchange-traded funds have not been as successful. Interestingly, while several Layer-2 solutions such as Base, Arbitrum, and Optimism have thrived, their success has diverted considerable transaction volume away from Ethereum, driving its revenues to a four-year low. However, Hougan believes these concerns overlook a larger, more important context.
He emphasized that blockchain applications enjoying widespread user adoption are primarily built on Ethereum. Notably, over 50% of stablecoins and more than 60% of decentralized finance (DeFi) assets are based on the Ethereum blockchain.
Hougan remains optimistic about Ethereum’s future, highlighting sustained institutional confidence. For instance, asset manager BlackRock has decided to develop a tokenized money market on Ethereum this year, and Nike has chosen Ethereum to launch its Web 3 platform, Swoosh.
Hougan pointed out Ethereum’s substantial ecosystem, noting that it boasts the most active developers, the most engaged users, and a market cap five times larger than its closest competitor. He also underscored Ethereum’s unique position in the regulatory landscape, with a thriving regulated futures market and a multi-billion-dollar ETF market.
Drawing a parallel to Microsoft, Hougan argued that just as Microsoft remains a dominant force despite the presence of other tech companies offering specialized services, Ethereum maintains a similar standing in the blockchain world. Concluding his memo, Hougan asserted that Ethereum’s potential remains vast, suggesting that market sentiments could shift as the November US presidential elections approach. Currently, ETH trades at $2,306, with a total market cap of $277 billion.
