A Bloomberg Intelligence report, published on Friday (3), highlights the strength of Ethereum and notes that the asset should outperform Bitcoin as it reaches the general public.
Another cryptocurrency highlighted by Bloomberg was Polygon (MATIC), currently the 10th largest by market capitalization. According to the study, “no second-layer project has created more network effects for Ethereum than Polygon,” used primarily for coining NFTs.
Coming back to Ethereum, Bloomberg analysts were bullish on EIP-4895 (also called the Shanghai update) hoping that it may create more demand in the market.
Ethereum vs. Bitcoin
Created six years after Bitcoin, Ethereum quickly established itself as the second-largest cryptocurrency in the world due to its multifunctionality. During the 2017 bull cycle, it reached its all-time high against BTC, but crashed in subsequent years.
However, since 2019, ETH has been in a huge bull run against BTC, once again threatening its dominance. According to Bloomberg Intelligence, this pattern will continue as Ethereum reaches more investors.
“The Upward Trajectory Of The Ethereum/Bitcoin Cross Rate Began In 2019 And Shows Few Signs Of Weakening. A Bull Market At Rest Is Our View On The Cross Between The #2 Cryptocurrency And #1 (Bitcoin), Which Is Becoming A Digital Version Of Gold In A World Heading In That Direction,” Bloomberg Analysts Note. Intelligence.
“The Chart Shows The Constant Rate Of Ethereum/Bitcoin Since The 2021 Peak In The Bloomberg Galaxy Crypto Index. This Suggests A Migration To The General Public, And Once The Dust Of A Reversal In Risk Assets Settles, Ethereum Is Likely To Go Back To Doing What It Has Been Doing: Outperforming.”
Finally, the study also noted that Ethereum’s biggest upgrade, The Merge, was an “impressive achievement,” mainly due to the reputational and financial risks involved.
Analysts Bullish on Ethereum’s Shanghai Upgrade
Another point highlighted by Bloomberg analysts is the arrival of the Shanghai Update (EIP-4895). In short, it will allow investors to remove their staked ETH.
While this could cause significant selling pressure in the market, Bloomberg also notes that the Shanghai Update is likely to lead to even higher demand for ETH, as new investors can seek dividends by letting their coins sit still.
“While Exit Liquidity Is Available To First-Time Takers, The Introduction Of LSD And Ethereum’s Favorable Staking Economy Should See The Staking Rate Against Tier 1 Alt-Chains Begin To Decline. Substantially”.
“With A Real Return Of 5% […] The Demand For Participation Tends To Increase Both In Absolute And Relative Terms”.
Polygon (MATIC) also appears in the Bloomberg report
Finally, Bloomberg Intelligence notes that the number of daily active addresses has dropped by 33% on Ethereum. However, this same metric saw 86% growth on second-layer blockchains.
The biggest highlight was Poly g on (MATIC). Currently the 10th largest cryptocurrency with a market capitalization of $10.4 billion, MATIC is being used by big names like Reddit, Adidas, and Facebook, primarily to drive NFTs.
“Many of the most popular DeFi dApps on Ethereum, including Aave and Uniswap, have migrated and are being developed on Polygon,” Bloomberg Intelligence notes, noting that the project has more developers than top-tier cryptocurrencies like Fantom (FTM) and Avalanche (AVAX).
So while sharding is not coming to Ethereum, Polygon should continue to help ETH not lose projects and users to other blockchains like Solana, known for supporting more transactions per second.
