Bitwise Chief Investment Officer Matt Hougan called Ethereum (ETH) the “Microsoft of blockchains,” adding that none of the challenges facing the shrewd contract platform are existential.

Ethereum has challenges, but none of them are existential

In the recent note In his article, titled “A Contrarian Bet on Ethereum,” Hougan highlighted the falling ETH/BTC trading pair, indicating a weakening of Ethereum’s price against Bitcoin (BTC). At the time of going to press, the trading pair was trading at 0.038, a three-year low.

Compared to some other leading digital currencies, ETH did not have a sturdy 2024. Year-to-date, Bitcoin is up 38%, while rival shrewd contract platform Solana (SOL) is up 31%. Binance’s BNB token is up 72% during the same period. However, ETH has remained flat, currently trading at $2,306.

According to Hougan, Ethereum’s needy performance in terms of token price has made “it cool to hate Ethereum right now.” Hougan noted several factors that could pose a threat to the Ethereum ecosystem, including the prospect of Democratic presidential candidate Kamala Harris winning and the Biden administration’s continued suspicion of all things cryptocurrency.

In addition, Bitwise CIO admitted that competing blockchain projects such as Solana, which offer higher throughput and lower transaction costs, pose risks. He also admitted that ETH funds (ETFs) I don’t have have had the same success as Bitcoin ETFs.

While Hougan acknowledged that several Layer 2 solutions such as Base, Arbitrum, and Optimism have been successful, he emphasized that their success has attracted so much transaction volume from Ethereum that his revenue he crashed to a four-year low. Hougan said those reasons are valid, but they “miss the bigger picture.”

Hougan emphasized that blockchain applications that are successful in user adoption are dominated by Ethereum, such as stablecoins and decentralized finance (DeFi). Over 50% of 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

In the note, Hougan mentioned that institutional trust in Ethereum remains high, as seen by asset manager BlackRock’s decision to develop a tokenized money market on Ethereum this year. Similarly, Nike chose Ethereum to launch its Web 3 hardware platform called Swoosh.

He noticed:

Ethereum has the most dynamic developers, the most dynamic users, and a market cap that is 5x larger than its closest competitor. It is the only programmable blockchain with a modicum of regulatory support in the US, with a burgeoning regulated futures market and a multi-billion dollar ETF market.

To bolster his argument, Hougan compared Ethereum to software giant Microsoft, stating that while other tech companies like Google, Zoom, and Slack have offered useful services, Microsoft is still bigger than all of those companies combined.

In conclusion, Hougan said that the possibilities for Ethereum are enormous. As the world approaches the November US presidential election, market participants may re-evaluate the second largest cryptocurrency by market capitalization. At the time of going to press, ETH is valued at $2,306, giving it a total market capitalization of $277 billion.

Featured image from Unsplash, chart from Tradingview.com