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00:22 BST, September 22, 2024The cryptocurrency market is abuzz with speculation about Ethereum (ETH). With its recent performance lagging behind Bitcoin (BTC) and competitors like Solana, many are wondering if this is the end for Ethereum or a temporary setback before a significant rebound.
While some analysts are cautious, others remain optimistic, pointing to historical trends and the blockchain’s continued dominance in decentralized applications (dApps).
Optimism After Federal Reserve Rate Cuts
According to Steno Research, the recent Federal Reserve interest rate cut could significantly benefit Ethereum by boosting onchain activity.
Coindesk.com quotes Mads Eberhardt, an analyst at Steno, who said:
“Ethereum’s active addresses remain strong, particularly when factoring in the growing adoption of rollups,” said Mads Eberhardt, an analyst at Steno.
Eberhardt added that transactional revenue appears to have bottomed out in August, a potential sign of recovery for ETH prices.
This report from Steno suggests Ethereum could regain some of its lost ground against Bitcoin. Ether has been outperformed by Bitcoin this year, with BTC surging 43% compared to Ether’s modest 8% gain.
However, history shows that ETH has previously surged rapidly during altcoin seasons, doubling its value relative to Bitcoin in just a few months.
The current market might see a similar trend, as decentralized finance (DeFi), stablecoin issuance, and non-fungible tokens (NFTs)—all of which primarily occur on the Ethereum blockchain—experience growth.
Image created by Market Business News.
A Bottom in Sight?
According to Dailyhodl.com, cryptocurrency analyst Benjamin Cowen also sees Ethereum nearing a crucial turning point.
In a recent video shared with his 813,000 YouTube subscribers, Cowen predicted that ETH could be close to reaching a bottom against Bitcoin (ETH/BTC). Based on historical precedents from 2016 and 2019, Cowen noted that Ethereum is following a similar price structure, which suggests a bottom may be close.
“It took about seven weeks for Ethereum/Bitcoin to bottom in 2016 and about eight weeks in 2019. We’re already eight weeks in, so I think we’re close to a bottom,” Cowen explained.
He further cautioned that while ETH/BTC could dip slightly lower, it’s unlikely to go significantly lower from here.
Ethereum: The “Microsoft of Blockchains”
Despite Ethereum’s struggles, Matt Hougan, Chief Investment Officer at Bitwise, remains confident about its long-term prospects, according to Cointelegraph.com.
Hougan argues that Ethereum’s position as the leading blockchain for dApps is unrivaled, drawing a comparison between Ethereum and Microsoft in terms of their dominance in their respective fields.
“Ethereum may be in the doldrums right now, but dismissing it would be shortsighted,” he said, emphasizing that it remains the blockchain of choice for developers and large companies.
In fact, Ethereum still hosts 50% of all stablecoins and 60% of decentralized finance (DeFi) assets, demonstrating its continuing relevance.
Hougan also pointed to major corporations like BlackRock and Nike, which have chosen to launch blockchain-based products on Ethereum.
“When the next large traditional company wants to do a blockchain product, I bet they’ll choose Ethereum too,” he added.
Challenges on the Horizon
However, it’s not all smooth sailing for Ethereum. The much-anticipated Ethereum ETFs have not delivered the expected price surge, leaving investors disappointed.
Additionally, Ethereum’s decision to shift much of its transaction volume to second-layer solutions has led to a drop in transactional revenue.
Nevertheless, Hougan maintains that Ethereum remains a strong contrarian bet through the end of 2024, particularly as the upcoming U.S. presidential election could bring regulatory clarity, potentially boosting Ethereum’s value.
“It’s cool to hate Ethereum right now. I bet this ends up looking silly,” Hougan stated in a memo quoted by Tradingview.com.
Ethereum: A Brief History
Ethereum was founded in 2013 by Russian-Canadian programmer Vitalik Buterin. The platform went live in July 2015, following a successful crowdsale in 2014, which helped raise funds for its development. Initially releasing with 11.9 million Ether (ETH) coins, Ethereum quickly became a cornerstone of the blockchain world.
Since its inception, Ethereum’s value has skyrocketed. In 2017, its price surged over 13,000%, and today, it remains the leading platform for decentralized applications (dApps) and smart contracts. Ethereum continues to shape the blockchain landscape.
Final Thoughts
Ethereum stands at a pivotal moment. With its dominance in decentralized applications and strong developer activity, it remains a significant player in the blockchain ecosystem.
While short-term challenges persist, many analysts, including Cowen and Hougan, believe that Ethereum could stage a significant comeback. As Matt Hougan pointed out, writing off Ethereum now may seem “silly” in hindsight.
The coming months will determine whether Ethereum continues to lead the blockchain space or whether it faces stronger headwinds from its competitors.