- Bitwise CIO Matt Hougan has warned against fading Ethereum.
- Hougan likened the prominent blockchain to Microsoft.
- It is not the first time Hougan has sounded optimistic about ETH in recent months.
Sentiment around Ethereum (ETH), the second largest crypto asset by market cap, has been in the dumps in recent months. The asset has continued to underperform fellow market leaders like Bitcoin (BTC) and Solana (SOL). The underperformance comes as some have begun to question whether the asset has lost its value proposition amid changing network dynamics.
But as some start to count ETH out, Bitwise CIO Matt Hougan has again come to the defense of the asset, warning that detractors may eventually have eggs on their faces.
“The Microsoft of Blockchains?”
“It’s cool to hate Ethereum right now. I bet this ends up looking silly,” Bitwise CIO Matt Hougan kicked off a note to investors on Tuesday, September 17.
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Hougan stated this as he argued that despite the network’s current challenges and the appeal of other ecosystems like Solana, the Ethereum network still had the best fundamentals. He cited Ethereum’s dominance in breakthrough applications like stablecoins, DeFi, and prediction markets through the Polygon-hosted Polymarket.
At the same time, Hougan highlighted that Ethereum has remained the primary destination of institutions and legacy firms, citing BlackRock’s tokenized fund that has now amassed around $500 million in assets under management and Nike’s .Swoosh platform. The Bitwise CIO argued that this trend of legacy institutions picking Ethereum was likely to continue thanks to its large user base, developer count, and regulatory edge in the U.S. with the SEC’s approval of futures and, most recently, spot ETFs backed by ETH.
Attempting to drive his point home, Hougan likened the sentiment around Ethereum to the average perception of Microsoft.
"It's like the Microsoft of blockchains. Everyone wants to talk about Google and Slack and Zoom, and with good reason: Each of them has brought game-changing technology to the market. But Microsoft is still larger than all of them put together."
With all these in mind, the Bitwise CIO made the “contrarian bet” that the market will likely reevaluate Ethereum’s value towards the November 2024 U.S. presidential elections.
It is not the first time Hougan has sounded optimistic about ETH in recent months.
Is $5,000 Still in Play for ETH?
Just before the launch of spot Ethereum ETFs in July 2024, the Bitwise CIO asserted that demand from the products would drive the asset to new all-time highs above the $5,000 price point by year-end. But as Hougan conceded in Tuesday’s note, these products have not had the launch many had hoped for.
Nearly two months after their launch, net total flows to the products remain negative. Outflows from Grayscale’s converted trust have drowned out billions of inflows to offerings from other issuers like BlackRock, Fidelity, and Bitwise. Specifically, the newly approved spot Ethereum ETFs have recorded $606 million in net outflows since launch, per Farside Investors data at the time of writing.
This performance puts Hougan’s end-of-year ETH price prediction in doubt, as the asset continues to trade around the $2,300 price point at the time of writing.
On the Flipside
- Despite Hougan’s optimism, ETH’s fate largely depends on macroeconomic developments.
- Several analysts, including JP Morgan, had predicted that Ethereum would outperform Bitcoin in 2024. Three months to the end of the year, this prediction has yet to materialize.
Why This Matters
The sentiment around Ethereum has been significantly negative in recent months amid lackluster price action. Hougan’s statements highlight that it is not all doom and gloom and that the network maintains strong fundamentals.
Read this for more on Ethereum:
Diamond Hand Ethereum Investor Begins Massive ETH Sell-Off
See how Google may be set to spark a new wave of blockchain adoption:
Google Cloud Unveils Blockchain RPC Service: What It Means for Adoption