Ethereum has been in a rough patch lately, with sentiment surrounding the blockchain appearing gloomy. Matt Hougan, the chief investment officer of Bitwise, has openly acknowledged this, yet he maintains a bullish stance. While Ethereum’s current reputation might be less than stellar, Hougan believes those quick to dismiss the platform might regret it in the long run.
He pointed out that negativity around Ethereum has grown, especially with the ETH/BTC ratio at its lowest in three years and the price of Ether lagging behind other prominent cryptocurrencies like Solana and Bitcoin. As Hougan put it, “It’s cool to hate Ethereum right now,” but he also expressed confidence that the narrative will shift, saying, “I bet this ends up looking silly.”
Ethereum’s detractors have plenty to criticise at the moment. Its price performance has been less impressive compared to some of its competitors. CoinGecko data shows Ether trading at around $2,390, with only a modest 3% rise over the last 24 hours. In comparison, Bitcoin has surged by 40% since the start of the year. Ethereum, meanwhile, has barely moved, up only 0.2%. The gap in performance has contributed to the downbeat sentiment, especially among those hoping for quicker gains.
However, Hougan is not swayed by short-term price fluctuations. Despite the tough times, Ethereum remains a dominant force in the world of decentralised finance (DeFi). As Hougan highlighted, Ethereum is still home to 50% of all stablecoins and hosts 60% of the assets locked in decentralised finance. That’s a significant figure that speaks to Ethereum’s ongoing relevance in the blockchain ecosystem.
One of the main reasons Hougan is confident about Ethereum’s future is its role in decentralised finance. DeFi has become a vital part of the cryptocurrency landscape, offering new ways for people to lend, borrow, and trade assets without the need for traditional financial institutions. Ethereum has been central to this revolution, providing the infrastructure for many of the most popular DeFi applications.
Ethereum’s influence also extends to the corporate world. Hougan believes that Ethereum’s appeal will continue to attract major companies looking to explore blockchain technology. He likens Ethereum to Microsoft, noting that when the next big traditional company looks for a blockchain platform, Ethereum will likely be their choice. The comparison to Microsoft is telling—just as Microsoft became the go-to software provider for businesses, Ethereum could become the default blockchain for corporate applications.
While Ethereum’s price struggles have caused some to lose faith, there are still clear signs of strong developer activity on the platform. Data from Cryptometheus shows that Ethereum had more than 37,800 GitHub commits from 2,615 active developers in just one week. That’s 68% more developer activity than its closest rival, Polygon. Such robust development activity is a crucial indicator of a blockchain’s health and future potential. Even if market sentiment is down, Ethereum’s thriving developer community continues to push the platform forward.
Logan Jastremski, a founder and managing partner at Frictionless Capital, echoed Hougan’s sentiments during Singapore’s TOKEN2049 conference. Despite the negative chatter online, he noted strong real-world interest in Ethereum. Jastremski observed that Ethereum still dominates the conversation among blockchain professionals and enthusiasts, maintaining the majority of “mind share” at the event. This suggests that, while prices may be stagnant, Ethereum’s broader influence in the blockchain space remains strong.
The reasons for Ethereum’s current struggles are complex. The US Securities and Exchange Commission (SEC) has expressed concerns about staked-Ether assets, which it views as potential securities. This has added a layer of regulatory uncertainty for Ethereum, particularly in the US market. Staked assets are a key component of Ethereum’s value, as they play a crucial role in its shift to a proof-of-stake model, which is designed to make the network more energy-efficient and scalable. Any negative regulatory action on staked assets could have a significant impact on Ethereum’s value proposition.
Despite these headwinds, Hougan remains optimistic. He acknowledges that the mood in the Ethereum community is “tough” at the moment, with Ether’s price at a 40-month low against Bitcoin. But he sees this as a temporary setback rather than a sign of long-term decline. According to him, Ethereum’s position as the leading platform for decentralised finance and blockchain innovation will ensure its continued relevance in the years to come.
One of the reasons Ethereum continues to face criticism is its scalability issues. The network has long struggled with congestion and high fees, which have made it less appealing to users compared to newer blockchains like Solana, which offer faster transaction speeds and lower costs. However, Ethereum’s ongoing upgrades, particularly the move to Ethereum 2.0, aim to address these issues. The transition to a proof-of-stake consensus mechanism is expected to significantly improve the network’s efficiency, reducing fees and increasing throughput.
It’s also worth noting that Ethereum’s dominance in decentralised finance and smart contracts has created a network effect that is difficult to replicate. Many of the most widely used applications in the cryptocurrency space are built on Ethereum, and migrating these applications to other blockchains would be a complex and costly process. This gives Ethereum a level of resilience that few other blockchains can match, even when its price is underperforming.
