Bitwise CIO: Critics of Ethereum Will Be Proven Wrong

Ethereum has recently faced criticism due to its negative price trend, but this situation is expected to change. This view was expressed by Bitwise’s Chief Investment Officer (CIO) Matt Hougan.

“It’s currently fashionable to dislike Ethereum. I bet that in the end, this will look foolish,” he noted. 

In recent months, Ethereum has shown weakness. At the time of the launch of the ETF on July 23, the cryptocurrency was trading around $3500; at the time of writing, the price is slightly above $2400. 

Against Bitcoin, Ethereum’s quotes have hit a local low, falling below the 0.04 level. The last time it reached this value was in April 2021.

“Right now, nobody likes Ethereum. […] The community atmosphere is tense,” Hougan noted.

He cited the following reasons for the weakening of the second-largest cryptocurrency by market capitalization:

• the risk of the November elections. Bitcoin has passed regulatory scrutiny, and even the head of the SEC, Gary Gensler, considers it a commodity, which cannot be said for Ethereum. Staked coins may be classified as securities. The agency is also concerned about the DeFi ecosystem, which largely determines the price of Ethereum;
• growing competition from Solana and other blockchains offering higher throughput and lower costs;
• questionable tokenomics. Due to the focus on L2 solutions, activity on the main network has decreased, and blockchain revenues have fallen to a four-year low;
• mixed ETF results. Bitcoin-based funds have raised billions, while the situation is not as optimistic for the second-largest cryptocurrency by market capitalization. 

“These are valid concerns, but they miss the bigger picture,” Hougan pointed out.

Advantages of Ethereum

The expert highlighted the following positive aspects of Ethereum:

• almost all successful applications like stablecoins, DeFi solutions, and Polymarket are built on this blockchain;
• BlackRock chose Ethereum to create a tokenized fund, which exceeded $500 million in value;
• Nike decided to build a Web3 platform based on this network;
• Ethereum has the most active developers, users, and a market capitalization five times that of its nearest competitor;
• Ethereum is the only programmable blockchain with some regulatory support in the US, and it has a growing multi-billion dollar futures and ETF market.

“It’s like Microsoft among blockchains. Everyone wants to talk about Google, Slack, and Zoom, and for good reason: each brought revolutionary technology to the market. But Microsoft is still bigger than all of them combined. […] People are too quick to dismiss Ethereum and the real success we are already seeing in its ecosystem,” emphasized the Bitwise CIO.

He believes that none of Ethereum’s problems seem existential, and the cryptocurrency’s opportunities are abundant. The market may re-evaluate ETH as the November elections approach and any regulatory clarity emerges. 

“At the moment, it looks like a potential contrarian bet for the rest of the year,” concluded Hougan.

Previously, he supported the launch of a meme coin ETF.

Back in August, a top manager at Bitwise concluded that the crypto industry was “not optimistic enough.”