Matt Hougan, chief information officer of Bitwise, wrote an article "Betting Against the Trend of Ethereum" , saying that everyone is now bullish on Ethereum. It seems that it is fashionable to hate Ethereum now, but after a while everyone will feel stupid.
( Ethereum developers talk about development difficulties and reveal that Ethereum is off track )
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ToggleETH/BTC exchange rate returns to 2021 lows
The ETH/BTC exchange rate recently hit a three-year low, returning to the level in April 2021. The year-to-date increase has also completely lost to its main competitor Solana:
BTC: 38%
SOL: 31%
ETH: 3.23%
Matt Hougan pointed out that the atmosphere in the Ethereum community is also quite sluggish.
No one likes Ethereum right now
Matt Hougan lists several reasons for Ethereum’s downturn:
electoral risk
Ethereum faces real risks in the U.S. presidential election.
While Bitcoin is largely unregulated, with even SEC Chairman Gary Gensler admitting it is not a security, Ethereum is not. The SEC seems to believe that pledged ETH is a security and has serious concerns about the DeFi ecosystem promoted by Ethereum.
Ethereum may face challenges if Harris wins the election and continues Biden's hostility to cryptocurrencies.
Solana and other public chains compete
Ethereum faces fierce competition from emerging public chains with high throughput and low cost. Solana is the main challenger, and other existing and upcoming public chains are also beginning to put pressure on it.
In the crypto field, there is a concept of speculating on the new rather than the old. Due to Ethereum’s older and higher-cost technology, “optimistic on Solana and other new public chains and bearish on Ethereum” has become the mainstream idea.
Challenging token economy
Ethereum's aggressive expansion of L2 transaction volume over the past few years over core L1 has been a huge success, with L2 activity such as Base, Arbitrum, and Optimism soaring.
However, the rise of L2 has caused Ethereum's revenue to fall to a four-year low, and many people also doubt whether the development of L2 is a waste of time.
ETF performance sluggish
The Ethereum spot ETF has not had the overwhelming success of the Bitcoin ETF, although the ETF raised billions of dollars, which was offset by Grayscale ETHE's $2.7 billion in outflows.
( Grayscale ETHE unlocking is about to end, and the Ethereum ETF is expected to see the light of day )
Ethereum dominates most large crypto applications
Matt Hougan thinks the above are all good reasons to worry about Ethereum, but he also feels it misses the broader point.
Public chains such as Ethereum and Solana are trying to create a "public computer", a global database that can be used by everyone, and can be used to develop applications. But when you look at which applications are achieving breakout success, you’ll find that they are almost all dominated by Ethereum:
Stablecoins : More than half of all stablecoins are issued on Ethereum.
DeFi : Over 60% of all DeFi assets are locked on Ethereum.
Polymarket : Breakthrough prediction market finally lands on Ethereum.
There are many more examples.
Matt Hougan noted:
When BlackRock wanted to build a tokenized money market fund this year, it chose Ethereum, which currently manages more than $500 million in assets; when Nike launched a Web3 creation platform called .Swoosh, it chose Ethereum. When the next big traditional company wants to do a blockchain product, I bet they will choose Ethereum too.
Microsoft of Blockchain
Matt Hougan continues to list the benefits of Ethereum:
Market capitalization 5 times greater than major competitors
Have the most active developers and the most active users
The only programmable blockchain with minimal regulatory support in the United States
Has a thriving regulated futures market and a multi-billion dollar ETF market
He concluded:
Ethereum is like the Microsoft of blockchain. Everyone wants to talk about Google, Slack, and Zoom and think that these applications have brought revolutionary technology, but Microsoft is still bigger than these companies. This does not mean that I am not optimistic about public chains such as Solana. They are having a significant impact and have many benefits, but I think people are too quick to ignore the success that Ethereum and its ecosystem have achieved in the real world. In my opinion, Ethereum's challenges are minimal and its opportunities are emerging. The market will re-evaluate Ethereum as the election approaches or any regulatory clarity emerges, so it looks more like a potential contrarian bet at the end of the year.
