![Fidelity Says Stablecoins Will Drive ‘Divergence’ Between Bitcoin and Ethereum – Here’s Why Fidelity Says Stablecoins Will Drive ‘Divergence’ Between Bitcoin and Ethereum – Here’s Why](https://dailyhodl.com/wp-content/uploads/2022/10/btc-eth-Absolutely-Crushed.jpg?w=1024)
Fidelity Says Stablecoins Will Drive ‘Divergence’ Between Bitcoin and Ethereum – Here’s Why
Financial services giant Fidelity is forecasting how stablecoins could cause further divergence between the top two crypto assets by market cap.
In a new report, Fidelity says that the rise of stablecoin usage on Ethereum (ETH) will push it apart from its competitors in the layer-1 sector as well as from Bitcoin (BTC).
“Bitcoin and Ethereum are likely to continue diverging technologically as we look toward the future. This divergence will result in more differentiated use cases and increase the potential to add further diversification to a portfolio. One specific example of this phenomenon is the rise of stablecoins…
The recent rise of stablecoins on Ethereum has already made a case for Ethereum offering greater utility in this sector.”
Fidelity says one of the key differences between the two chains is that Ethereum is used as a medium for the transfer of assets while Bitcoin is primarily held on a long-term basis. Compared to other smart contract platforms, Fidelity says Ethereum already has a massive advantage.
“In 2023, about $3.4 trillion, $1.4 trillion, and $3.5 trillion were transferred in bitcoin, ether, and Ethereum layer-1 stablecoins, respectively. This data does not detract from Bitcoin’s store of value thesis but instead reinforces the idea that Bitcoin investors typically hold for the long term.
In fact, the Bitcoin thesis hinges primarily on investors believing in its ability to hedge against currency inflation. This suggests that Bitcoin and Ether can complement each other in a portfolio by providing distinct types of utility and serving different markets…
The dominant network effects of Ethereum are a significant reason other smart contract platforms could have a continuously harder time catching up.”
Ethereum is trading for $2,332 at time of writing while BTC is valued at $57,075.
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The post Fidelity Says Stablecoins Will Drive ‘Divergence’ Between Bitcoin and Ethereum – Here’s Why appeared first on The Daily Hodl.
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Author: Mehron Rokhy