Opinion: “deflationary” Ethereum 2.0 can squeeze bitcoin

After switching to the second version of the Ethereum protocol, it can shift bitcoin from the first line in the asset rating by capitalization . This point of view was presented by Messari analyst Ryan Watkins in the FinTech Today podcast.

“Bitcoin looks more attractive compared to Ethereum as a store of value – its monetary policy is predictable and the network is secure. The second largest cryptocurrency in terms of capitalization may challenge this after switching to Proof-of-Stake, ”the researcher said.

In the podcast, Watkins drew attention to the upcoming change in the economy against the background of the transition to ETH2 with the introduction of a mechanism for burning part of transaction fees. He believes that this could lead to a reduction in the market supply of coins.

“If the Ethereum network is more secure and the asset has stronger monetary policy, what can Bitcoin offer?” , – asked the analyst.

Watkins emphasized that a “massive and diverse” economy is built on the blockchain of the second largest cryptocurrency. The booming decentralized app sector will attract new users faster than Bitcoin, he added.

“At some point, the economy of the second cryptocurrency will absorb so much human and financial capital that it will be equal to the GDP of individual countries. People will be able to make a living in this ecosystem, ”the expert suggested.

In December, Watkins predicted the arrival of institutional investors in Ethereum thanks to the appearance of futures for this asset on the Chicago Mercantile Exchange.

Earlier, the head of Pantera Capital admitted that Ethereum will outstrip Bitcoin in terms of growth, explaining this by the launch of the zero phase of the second version of the protocol.

As a reminder, Messari analysts expressed confidence that the Ethereum network will remain out of reach of competitors thanks to the deployment of a second tier solution based on Rollups.

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