Matt Hougan, CIO of Bitwise, a crypto-based index fund and ETF provider, has explained why he believes ether might be an interesting asset for an investment portfolio.
Three reasons to add ETH to your portfolio, and one important reason to stay BTC-only.
A thread.
— Matt Hougan (@Matt_Hougan) June 20, 2024
Hougan states three key reasons for investing in ether: diversification to “own the market,” different use cases than bitcoin, and historical analysis.
Bitwise CIO Presents Three Reasons to Invest in Ether
Matt Hougan, CIO of cryptocurrency index fund and exchange-traded fund (ETF) provider Bitwise, recently presented several reasons why institutional investors should add ether to their portfolios.
Hougan referred to three key fundamentals supporting ether as an investment in the crypto asset class. The first one has to do with diversification.
Hougan explains that as cryptocurrencies are part of a still insurgent asset class, it is difficult to pinpoint the specific crypto trait that will change the world. Consequently, the goal of each investor should be to “own the market.”
In this regard, Hougan considers a 3:1 bitcoin/ether allocation as the default starting place for most investors.
Ethereum also targets different use cases than Bitcoin and this might give ether an edge, given that programmability and decentralized finance constitute a different offer for the market.
This gives ether a different value compared to Bitcoin, which aims to be the “best form of money that ever has existed.” He assessed:
Adding some ETH to a majority BTC position gives you broader exposure to all the things public blockchains can do.
The third reason supporting this is history. Hougan stated that adding ether to an investment portfolio during a full market cycle has historically boosted the returns compared to a BTC-only investment proposal.
Nonetheless, he acknowledged that BTC outperformed ETH during the last year and that previous performance might not guarantee future returns.
Hougan concluded that while BTC is probably the dominant new form of money in crypto, “there are other potentially interesting applications of public blockchains, and ETH is currently the leader in those.”
This week, Bitwise disclosed a $2.5 million seed investment interest for its ether ETF product.
What do you think about Bitwise CIO’s take on Ethereum? Tell us in the comments section below.
