Morgan Stanley thinks ETH’s dominance could disappear

Morgan Stanley analyst believes Ethereum’s dominance could disappear in the face of competition

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The report, titled “Cryptocurrency 201: What is Ethereum?” was written by Morgan Stanley investment strategist Denny Galindo and partner James Ferraioli.

The report looks at Ethereum and how it differs from Bitcoin

: major currency. It also covers Ethereum use cases such as decentralized finance or DeFi and non-fungible tokens or NFTs.

Identifying a bear case for ethereum, Morgan Stanley analysts noted: “Ethereum faces more competition in the smart contract market than Bitcoin faces in the store of value market. ETH could lose out from smart contract platforms to more market share of faster or cheaper alternatives.”

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In recent years, so-called Ethereum killers or alternatives have become more prominent. These include coins and projects such as Avalanche (AVAX), Cardano (ADA), and Polkadot (DOT).

Morgan Stanley analysts pointed to the fact that it has a “more ambitious addressable market”, “compared to Bitcoin, Ethereum faces more competitive threats, scalability issues and complexity challenges. In addition, Ethereum Coins are more volatile than Bitcoin.”

As for scalability, Morgan Stanley researchers claim that fewer transactions are required to use Bitcoin, which is “similar to a decentralized savings account.”

“Demand for ethereum is more transaction-related. Thus, similar scaling constraints put more demand on ethereum than they inhibit demand for bitcoin, whose users don’t need many transactions,”the report said.

The researchers also pointed to Ethereum’s evolving regulatory environment and how applications such as DeFi conflict with existing laws.

“Demand for ether could decline if regulation or legislation reduces demand for these transactions,” the report said.

Notably, ethereum developers ignored JPMorgan’s earlier warning that the network might not scale fast enough to avoid competition.

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