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Galaxy Digital CEO Michael Novogratz explains why Ethereum is outperforming Bitcoin

Galaxy Digital CEO Michael Novogratz explains why Ethereum is outperforming Bitcoin
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Michael Novogratz, CEO of Galaxy Digital, says that Ethereum is outperforming the leading cryptocurrency Bitcoin because the fundamental outlook of Ether is making investors take it for a technical bet.

Novogratz outlined this view during interview On CNBC’s Squawk Box, where he talks about cryptocurrencies as well as current expectations in the stock markets.

Ethereum offers more than just an inflation hedge

The Galaxy Digital CEO’s comments come at a time when the market is experiencing a downturn exacerbated by worldwide uncertainty regarding the Omicron variant of Covid-19.

The recent selloff has pushed the price of Bitcoin (BTC) below $50,000, with the benchmark coin dropping more than 13% in the past week. Meanwhile, Ethereum has struggled to break above $4,400, with its price down nearly 6% over the past week.

But while data for CoinGecko shows that the price of BTC has increased by 170% over the past year, it is 680% relative to the price of Ethereum.

According to Novogratz, part of the reason why ETH has outperformed BTC is the fact that the former is attracting more investors amid a shift in investment views.

He says Bitcoin is limited in its use cases, with usage currently seeing most people choose it as a hedge asset. On the flip side, Ethereum has great use cases, from smart contract functionality to applications in decentralized finance (DeFi) and non-fungible tokens (NFTs).

It is this “flexibility” that helps propel Ethereum and outperform the leading cryptocurrency.

People see Ethereum as a technical bet and Bitcoin as a fiat cut.” Explained in the presentation.

Novogratz also spoke about the cryptocurrency and stock markets, saying that cryptocurrency trading was not as bullish as the stock markets. However, he remains bullish on the broader crypto space, predicting that even though the price of Bitcoin drops below $50K, it is unlikely to drop below $40K. And that would be the case even with a higher risk-taking effect from the very hawkish Fed, he added.

He also identified the institutional adoption and steady appreciation of cryptocurrencies across countries as a good environment for the crypto asset class.

He noted that the world has “wake up” to the fact that cryptocurrency is now an asset class, adding that people are now looking at bitcoin as a necessary component of any crypto wallet.

A similar view of bitcoin also emerged during billionaire investor Barry Sternlicht’s comment that crypto is a “smart hedge.”

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