The crypto market has been tough on Ethereum (ETH) in 2024, with its ETH/BTC ratio hitting a three-year low. Despite facing increased competition, uncertain ETF results, and regulatory challenges, Matt Hougan, the Chief Investment Officer at Bitwise, believes Ethereum could offer a strong counter bet by the end of the year.
“Ethereum Presents a Counter Bet for Year-End!”
According to Matt Hougan, the sentiment around Ethereum is quite negative at the moment. The ETH/BTC ratio has dropped below 0.04, marking a three-year low. While there are valid concerns surrounding Ethereum’s performance, Hougan argues that this could be an opportunity for investors. Despite a promising start to the year, Ethereum’s price has increased by just 1%, compared to Bitcoin’s 42% rise and Solana’s 27% gain so far in 2024.
Hougan explained that the crypto community is facing multiple headwinds, including U.S. election risks, Solana’s rising competition, challenging tokenomics, and mixed results from Ethereum’s spot ETF listings. He also emphasized that, although spot Ethereum ETFs were approved in the U.S. earlier this year, the SEC still views staked ETH as a security. If Kamala Harris wins the presidential election, Hougan expects that the current administration’s skeptical stance on crypto will continue, posing further regulatory challenges for Ethereum.
Ethereum’s Struggles in 2024
Despite the launch of several spot Ethereum ETFs, the results have been mixed, especially compared to their Bitcoin counterparts. Additionally, rising competitors like Solana are crowding the market. “In crypto circles, betting on Solana and other newer blockchains has become trendy, while Ethereum is seen as outdated due to its older, more expensive technology,” Hougan remarked.
Ethereum has also shifted focus to Layer-2 networks, which has successfully moved transaction volume off the main Ethereum blockchain. However, this shift has led to a four-year low in revenues for the network. Hougan pointed out that some in the industry are questioning whether Ethereum’s focus on Layer-2 solutions has backfired.
Why Ethereum Could Be a Strong Bet
Hougan acknowledges the challenges and their impact on Ethereum’s price and sentiment. However, he believes many are missing the bigger picture. While both Ethereum and Solana aim to create a decentralized public computer for applications, Hougan highlights that the vast majority of groundbreaking success has occurred on Ethereum. More than half of all stablecoins are issued on Ethereum, and over 60% of DeFi assets are locked on the Ethereum blockchain. Additionally, Ethereum is the preferred settlement layer for platforms like Polymarket.
Hougan also noted that BlackRock’s $500 million on-chain U.S. Treasury fund is based on Ethereum, as is Nike’s NFT platform. He stressed that Ethereum boasts the most active developers, the largest user base, a multi-billion-dollar ETF market, and a market cap five times greater than its nearest competitor. “It’s like the Microsoft of blockchains,” Hougan said. “Everyone talks about Google, Slack, and Zoom, but Microsoft is still bigger than all of them combined.”
As the November elections approach and regulatory clarity emerges, Hougan believes the market will reassess Ethereum. For now, it appears to offer a compelling counter bet for investors by the end of the year.
Ethereum, Matt Hougan, Solana, regulatory challenges, Layer-2 networks
