Sarah Tran
Independent Analyst
- Morgan Stanley recently argued that Ethereum’s dominance could diminish as strong competitors emerge.
- Ethereum further faces competitive threats, scalability issues and complex challenges compared to Bitcoin.
- The investment bank believes that Ether could become more volatile than Bitcoin.
Morgan Stanley Wealth Management recently noted that Ethereum currently takes lead in market share in the decentralized finance (DeFi) and non-fungible token (NFT) sectors. However, analysts believe that Ethereum’s dominance could dwindle as competitors emerge.
Ethereum dominance may diminish
Morgan Stanley recently published a report on Ethereum, highlighting that the blockchain could lose its dominance if strong market competition turns up.
According to the report, Ethereum faces more competitive threats, scalability issues and complexity challenges than Bitcoin. The firm further stated that Ether is more volatile than Bitcoin.
Ethereum may lose its dominance as the network faces more competition in the smart contract market than Bitcoin faces in the store-if-value market. Morgan Stanley stated that Ethereum may lose smart contract platform market share to faster and cheaper alternatives.
Morgan Stanley further suggested that Ether poses a bigger investment risk compared to Bitcoin as fewer transactions per user are needed to utilize BTC.
However, Ethereum demand is tied closely to transactions, therefore, the network’s scaling limitations could hurt the demand for ETH more than Bitcoin demand.
In addition, the regulatory status of the DeFi and NFT sector may see stricter oversight in the future, which could reduce demand for Ethereum transactions.
According to Morgan Stanley, Ethereum is less decentralized than Bitcoin, with the top 100 addresses holding 39% of ETH, compared to 14% for BTC.
On a positive note, Morgan Stanley’s report highlighted that Ethereum has greater market potential than Bitcoin, noting its deflationary system through its transaction-based burning mechanism.
Once ETH transitions to a proof-of-stake consensus mechanism, the Ethereum network’s performance could improve significantly.
Ethereum price tests crucial support
Ethereum price has formed a rising wedge pattern on the 12-hour chart, suggesting that ETH is at risk of facing pullback.
ETH has dropped toward the lower boundary of the governing technical pattern at $2,883, coinciding with the 50 twelve-hour Simple Moving Average (SMA). Slicing below this critical line of defense could put a 28% decline on the radar.
ETH/USDT 12-hour chart
If buying pressure increases, the first area of resistance will appear at the 100 twelve-hour SMA at $3,039, coinciding with the 21 twelve-hour SMA.
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