Here’s What Could Widen the Gap Between Bitcoin and Ethereum

Fidelity's latest report anticipates that the growing use of stablecoins on Ethereum will deepen the technological and functional gap between it and Bitcoin, as well as other layer-1 blockchain platforms.

The report suggests that Bitcoin and Ethereum are set to increasingly diverge in their technological roles, leading to distinct use cases and offering diversified opportunities for investors.

Specifically, the expansion of stablecoin transactions on Ethereum is highlighted as a factor that will enhance Ethereum’s utility compared to its competitors.

Fidelity points out that Ethereum serves as a major platform for transferring assets, while Bitcoin is more commonly used as a long-term store of value.

In 2023, Ethereum saw approximately $3.5 trillion in stablecoin transfers, compared to $3.4 trillion in Bitcoin and $1.4 trillion in Ethereum transactions. This disparity underscores Bitcoin’s role as a hedge against inflation rather than a transactional currency.

Fidelity concludes that while Bitcoin and Ethereum serve different purposes, their complementary roles can benefit investors. Ethereum’s strong network effects present a significant advantage over other smart contract platforms, making it challenging for competitors to catch up.