Financial services giant Fidelity has released a new report predicting how stablecoins could drive a further wedge between the top two cryptocurrencies by market cap. According to Fidelity, the rise of stablecoin usage on Ethereum is expected to create a distinct separation between Ethereum (ETH) and Bitcoin (BTC), as well as other layer-1 competitors.
The report highlights that Bitcoin and Ethereum are likely to continue diverging technologically in the future, leading to more differentiated use cases and increased potential for portfolio diversification. Fidelity emphasizes the growing significance of stablecoins on Ethereum, stating that this trend has already showcased Ethereum’s superior utility in this sector.
One notable difference between Bitcoin and Ethereum, as noted by Fidelity, is that Ethereum is primarily used as a medium for asset transfers, while Bitcoin is often held for the long term. In terms of smart contract platforms, Ethereum holds a significant advantage over its competitors, according to Fidelity’s analysis.
In terms of transaction volume, Fidelity reports that in 2023, Ethereum saw transfers totaling $3.5 trillion, compared to $3.4 trillion for Bitcoin and $1.4 trillion for Ether. This data reinforces Bitcoin’s store of value narrative, with investors typically holding the cryptocurrency as a hedge against currency inflation. Fidelity suggests that Bitcoin and Ether can complement each other in a portfolio by offering distinct types of utility and catering to different markets.
The report also underscores the dominant network effects of Ethereum, which could make it challenging for other smart contract platforms to catch up. At the time of writing, Ethereum is trading at $2,332, while Bitcoin is valued at $57,075.
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