The chief investment officer of crypto asset management firm Bitwise says Ethereum (ETH) appears to be in a period of stagnation after being overtaken by both Bitcoin (BTC) and Solana (SOL).
In a new blog post, Bitwise director Matt Hougan says say that Ethereum is in trouble due to competitors with superior technology, the risks associated with the upcoming elections, shifting volume, and a slow start to the launch of an ETH-based exchange-traded fund (ETF), causing it to outperform then SOL and BTC.
“The ETH/BTC ratio – a comparison of the price of Ethereum versus the price of Bitcoin – recently hit its lowest level in three years. On a year-over-year basis, Ethereum is flat, while Bitcoin is up 38%, and Ethereum’s closest competitor, Solana, is up 31%.”
Hougan says that if Kamala Harris were to be elected president and continue the Biden administration’s harsh treatment of digital assets, the leading smart contract platform could be in trouble.
He goes on to say that ETH also faces technological challenges from newer, younger blockchains, such as Solana, which offer faster throughput and lower transaction fees. According to Hougan, it is currently trendy in the crypto world to be bullish on Solana and bearish on ETH.
The executive goes on to say that another problem with Ethereum is the shift in volume to layer 2 scaling solutions built on top of it.
“The rise of Layer-2s has pulled so much volume away from Ethereum that revenues have fallen to their lowest level in four years. Many wonder if Ethereum has shot itself in the foot by scaling away from the fundamental Layer-1 blockchain.”
However, despite listing the leading smart contract platform’s potential shortcomings, Hougan says none of ETH’s problems appear “existential.”
“Ethereum has the most active developers, the most active users, and a market capitalization five times larger than its nearest competitor. It’s the only programmable blockchain with some regulatory support in the US, with a thriving regulated futures market and multi-billion dollar ETF market…
From my seat, none of Ethereum’s challenges seem existential, and the opportunities are numerous. I suspect the market will begin to reassess Ethereum as we get closer to the November elections and eventual regulatory clarity. For now, it looks like a potential contrarian bet until the end of the year.”
Ethereum is trading at $2,302 at the time of writing, down 3.4% over the past 24 hours.
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