Ethereum is facing significant challenges, particularly in the shadow of Bitcoin's dominance and the rise of competitive blockchains like Solana.
The ETH/BTC ratio has hit a three-year low, signalling Ethereum's underperformance against Bitcoin, which has surged 38% year-to-date.
By comparison, Ethereum's price has remained flat, and competitors such as Solana have increased by 31%.
Matt Hougan, Chief Investment Officer of Bitwise, highlighted in his memo titled "A Contrarian Bet on Ethereum," that this underperformance has led to growing scepticism within the market, exacerbated by Ethereum's ongoing regulatory scrutiny from the SEC, particularly concerning staked ETH and the decentralised finance (DeFi) ecosystem.
Hougan further acknowledged the rising pressure from newer blockchains, particularly Solana, which boasts higher throughput and lower transaction costs.
This competitive landscape, combined with Ethereum's tokenomics shifting as transactions move to Layer-2 networks like Base, Arbitrum, and Optimism, has further dimmed Ethereum’s revenues on its core Layer-1 blockchain.
According to Hougan, Ethereum’s Layer-1 blockchain revenue has now reached a four-year low, adding to the already bearish market sentiment.
However, despite these hurdles, Hougan remains steadfast in his belief that Ethereum's role in the blockchain ecosystem is being underestimated.
Despite the tough market conditions, Ethereum continues to dominate critical sectors of the blockchain ecosystem, particularly in decentralised finance (DeFi) and stablecoins.
Hougan noted that over 60% of DeFi assets are locked on Ethereum, and more than half of all stablecoins issued are on its network.
This dominance is not merely theoretical; it has been reinforced by real-world applications from major institutions.
Hougan pointed out that when institutions like BlackRock needed to develop a tokenised money market fund, they chose Ethereum.
Similarly, Nike’s entry into the Web3 space was built on Ethereum, further solidifying its status as the preferred platform for large-scale blockchain projects.
The memo emphasises that while newer blockchains such as Solana offer some technological advantages, Ethereum’s status as the most established and trusted platform with the most active developers, users, and projects cannot be overlooked.
Hougan compares Ethereum’s role to that of Microsoft in the tech industry, describing Ethereum as the foundational technology upon which much of the blockchain space relies, despite the presence of younger competitors.
One of Ethereum's most pressing concerns is its regulatory situation in the United States.
While Bitcoin has largely passed through the scrutiny of regulatory bodies, Ethereum remains a focus of the SEC, especially regarding issues like staked ETH and the broader DeFi ecosystem.
This regulatory uncertainty has weighed heavily on Ethereum’s price and market sentiment.
However, Hougan believes that regulatory clarity could emerge around the November election, particularly if the Biden administration softens its stance on crypto regulation.
If this happens, it could provide a catalyst for Ethereum’s price to rebound, especially as it remains the only programmable blockchain with regulated futures markets in the U.S.
Hougan also noted the launch of multiple Ethereum ETFs, which, despite mixed results in net flows, signal confidence in Ethereum's long-term potential.
Despite the challenges, Hougan sees Ethereum as a prime contrarian investment opportunity.
The memo explains that while Ethereum’s struggles are clear, none of them are existential.
Hougan pointed out that Ethereum’s dominance in key areas of the blockchain ecosystem, such as DeFi and stablecoins, combined with its robust developer activity, makes it a compelling long-term bet.
He concluded his memo by saying,
"None of Ethereum’s challenges seem existential, and its opportunities are brimming."
Hougan remains optimistic that investors will reassess Ethereum’s potential as regulatory clarity improves, and that Ethereum’s foundational role in the blockchain ecosystem will continue to attract major institutional players.
This perspective makes Ethereum’s current undervaluation, in Hougan's view, a potential opportunity for those willing to bet on its long-term success.
He suggests that, much like Microsoft’s rise to dominance in the tech world despite the emergence of newer companies, Ethereum’s entrenched position in the blockchain industry will allow it to thrive despite growing competition.
As of writing, Ethereum ($ETH) is trading at $2,326.47, reflecting an 11.63% decrease over the past month.
However, the token has experienced a 2.19% uptick in value and a notable 4.04% rise in trading volume within the last 24 hours, indicating signs of resilience amidst the recent downturn.
Family offices are investing more in Ethereum than Bitcoin through crypto ETPs, showing stronger interest in Ethereum among smaller investors. Larger institutions still dominate Bitcoin ETPs, but Ethereum is attracting a broader and more diverse range of players.
WeatherlyThe United States Secret Service has partnered with Canadian law enforcement and securities regulators to launch a coordinated operation to dismantle a growing threat in the crypto space.
XingChiCardano’s Midnight sidechain will distribute tokens to 37 million users across eight major blockchains, including Bitcoin and Ethereum, in one of the largest airdrops in blockchain history. The airdrop, called the Glacier Drop, will issue NIGHT and DUST tokens and aims to promote privacy in decentralized finance.
AnaisVirgil Griffith, an Ethereum developer, was arrested in 2019 for giving a lecture in North Korea on blockchain technology, violating US sanctions. After serving over three years, he was released in April 2025 and is now transitioning to parole while facing post-prison restrictions.
AnaisWFP USA is now accepting over 80 cryptocurrencies for donations to support its Emergency Hunger Relief Fund, targeting $25 million to aid 58 million people facing starvation. This move aims to modernise fundraising, reduce transaction fees, and speed up donations to tackle the global hunger crisis.
WeatherlyUS stock and crypto markets jumped after the president announced a 90-day tariff pause for all countries except China, now facing a 125% levy. Over 75 nations have entered trade talks to avoid escalation. Trump sparked controversy, claiming leaders are “calling us up, kissing my ass” for deals. As tensions rise, could this bold or stupid trade strategy trigger a financial crisis?
CatherineZKasino’s exploit wallet suffered a $27 million loss in Ether after a leveraged position was liquidated, leaving investors still empty-handed nearly a year later. This turn of events raises questions about karmic justice in the crypto space.
CatherineThe price of Bitcoin and many other cryptocurrencies has just plunged to new lows over the weekend as the fallout from President Trump's reciprocal tariffs sends the global economy into disarray.
XingChiHong Kong's Securities and Futures Commission (SFC) has approved licensed crypto platforms to offer staking services, with strict regulations for security and transparency. This move is part of Hong Kong's broader strategy to strengthen its position as a global crypto hub while ensuring investor protection.
WeatherlyTrump’s latest tariffs have rattled global markets, with critics calling them more misguided than his Strategic Bitcoin Reserve plan. In 44 trading days, the tariffs have wiped out over $11 trillion from the US stock market, and the global crypto market has fallen over 11%. Can crypto survive under this administration?
KikyoFBI subpoena discloses attendees at Bitcoin event linked to Luke Dashjr’s Bitcoin theft. Dashjr loses over 200 BTC after PGP key compromise.
Cheng YuanThe man who tried to single-handedly put a final word on the inscription fanaticism was called Luke Dashjr.
JinseFinanceHow likely is it that inscriptions will be disabled? Does this game bring new development opportunities?
JinseFinanceInscriptions, BTC, Luke’s “conspiracy” to restrict inscriptions failed? The market is calling for a new interpretation of Bitcoin L2. Golden Finance, does the inscription expose the "flaws" of Bitcoin?
JinseFinanceJinseFinanceJinseFinanceTwitter变身“超级应用程序”，为用户提供透过eToro购买股票、加密货币及其他金融资产的选项。
fx168newsAdding payments would expand Twitter's commercial potential beyond its Twitter Tips feature, launched in partnership with Strike.
BeincryptoOn Thursday, a newly amended 13D filing revealed that Elon Musk assembled the team to take $7.1 billion out of his $44 billion Twitter takeover offer.
FtftxDAO, the fan club of crypto influencer and model Yuqing Irene Zhao, is guided by its core values of Simplicity, Wholeness, Meaning, and Purpose (SIMP).
Cointelegraph
