Looking at ETH price and outflows from spot ETH ETFs, the price of Ethereum is in hot water. Bitwise thinks betting against ETH is a mistake.
Ethereum
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is a legacy chain. It was among the first platforms to launch and pioneered smart contracts.
The launch of this solution extended what Bitcoin could provide and was a game changer. If anything, Ethereum opened up the way for alternatives like Solana, Tron, and the BNB Chain to learn and refine their networks.
The first smart contracts platform might have evolved over the years, but weaknesses remain.
A big one is the low throughput. This is a problem because Ethereum hosts many protocols, including DeFi, NFTs, gaming, and even DePIN.
The low throughput means gas fees fluctuate and remain, on average, higher than those charged by Cardano, Solana, and other “modern” blockchains.
Ethereum developers are aware, but this is not stopping critics from raining down on the platform. On-chain performance could be an issue, but its performance, relative to Bitcoin, is of concern to some investors.
The latest market data shows that the ETH/BTC ratio is at multi-year lows, slipping below 0.04 this week.
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Others are even out rightly dismissing the platform.
Ethereum Remains The King Layer-1: Here’s Why
However, in a recent post on X, Matt Hougan, the CIO of Bitwise, thinks ETH could be offering a once-in-a-lifetime opportunity to ready investors.
Ethereum’s slump has attracted some haters. What they’re missing:
– More than half of all stablecoins are on Ethereum.
– More than 60% of all DeFi assets are locked on Ethereum.
– Polymarket settles on Ethereum.ETH looks like a potential contrarian bet through year-end 2024. pic.twitter.com/fJpguMCeNQ
— Bitwise (@BitwiseInvest) September 18, 2024
Admittedly, Ethereum might lag in some metrics, allowing competitors like Tron and Solana to take over.
Nonetheless, according to Hougan, Ethereum is still king, and in other sections, including developer activity, user base, and real-world applications, the network has no match.
Headwinds explaining the complaints thus far include the rising competition like Solana, which offers low costs and high throughput. These platforms are gnawing market share, reducing Ethereum’s dominance.
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Additionally, some quarters argue that the shift to layer-2 solutions is bearish for main net adoption.
The more protocols opt to deploy on Arbitrum, Optimism, Base, and other alternatives, the lower revenue validators generate. Eventually, this might reduce the incentive to secure and decentralize the core.
According to L2Beat, all Ethereum layer-2s boast a TVL of over $35 billion.
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From the market side, the spot Ethereum ETF adoption rate is mixed. Unlike after the launch of a similar product for Bitcoin, ETH is still struggling for traction as Grayscale’s ETHE leads in outflows.
As of September 19, all spot Ethereum ETF issuers in the United States manage over $6.3 billion worth of ETH.
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Ethereum’s Fundamentals Are Hard To Replicate
While there were challenges, Hougan noticed that Ethereum was the home of DeFi. Over 60% of the $75 billion worth of assets managed by protocols are all found on Ethereum.
Moreover, developers are interested in contributing to Ethereum and pushing innovation – which could fuel sustained interest in ETH ETFs.
Therefore, while competitors thrive, Ethereum’s fundamental strengths will be tough to replicate, giving ETH an edge.
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In the short term, if ETH finds support and floats above $3,000, it could mark the start of a leg up to $4,000 and fresh 2024 highs by the end of the year.
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Disclaimer: Crypto is a high-risk asset class. This article is provided for informational purposes and does not constitute investment advice. You could lose all of your capital.
