Galaxy Digital CEO Michael Novogratz says Ethereum is outperforming the flagship cryptocurrency Bitcoin because Ether’s fundamental outlook has investors taking it for a technology bet.
Novogratz outlined this view during an interview on CNBC’s ‘Squawk Box’, where he talked about crypto as well as the current outlook in the equity markets.
Ethereum offers more than just an inflation hedge
The Galaxy Digital exec’s comments come at a time the market is experiencing a downturn exacerbated by uncertainty across the globe regarding the Omicron variant of Covid-19. A recent sell-off has pushed Bitcoin (BTC) price below $50,000, with a 7-day rout of 13% for the benchmark cryptocurrency. Meanwhile, Ethereum has struggled to break above $4,400, with its price down nearly 6% during the past week.
But while data on CoinGecko shows BTC price is up 170% over the past year, it’s a massive 680% for Ethereum.
According to Novogratz, part of the reason ETH is outperforming BTC is the fact that the former is attracting more investors amid a shift in investment perspectives.
He says that Bitcoin is limited in its use cases, with usage currently seeing most people go for it as a hedge asset. On the flipside, Ethereum has great use cases, from its smart contracts functionality to applications in decentralised finance (DeFi) and non-fungible tokens (NFTs).
It is this “flexibility” that is aiding Ethereum’s push and outperformance of the leading cryptocurrency.
“People see Ethereum as a technology bet and Bitcoin as a debasement of fiat currency bet,” he explained on the show.
Novogratz also talked about the crypto markets and equities, saying that crypto wasn’t trading as bullish as the equity markets. He however remains upbeat about the broader crypto space, predicting that even though Bitcoin price has slipped below $50k, it’s unlikely to dip under $40k. This, he added, will be the case even with a spike in risk-on effect from a very hawkish Fed.
He also identified institutional adoption and the steady appreciation of the crypto across nations as a good vibe for the crypto asset class.
He noted that the world has “woken up” to the fact that cryptocurrency is now an asset class, adding that people are now looking at Bitcoin as a necessary component of any crypto portfolio.