Crypto-investment firm Pantera Capital has revealed that it is “overweight” on Ethereum in the firm’s most recent investor letter. Despite the fact that ETH, at press time, was down by over 35% from its all-time high, the investment firm believes that it is undervalued on a relative basis to Bitcoin.
Given that Bitcoin’s dominance has been trending on the higher end of its range, of above 70% of late, with the bull market likely to continue for a while, it is likely that people will take some of their Bitcoin gains and roll it into Ethereum.
According to Pantera Capital’s Joey Krug, furthering the case for ETH being undervalued will be next month’s launch of CME ETH Futures, offerings that will legitimize Ethereum as something institutional investors can own. This launch, coupled with the fact that more and more holders are staking ETH on Ethereum 2.0, puts lower sell pressure on the altcoin’s price.
“These two things, combined with the fundamentals and historically low valuation relative to Bitcoin, should provide a lot of positive pressure on Ethereum’s price in 2021.”
Krug, the co-CIO at Pantera, also pointed out that the growth in DeFi has and will continue to have a positive impact on the price and fundamental value of ETH, given that ETH is the base money collateral for this new financial system.
“Over the course of this year, I believe this growth will continue and Ethereum will provide even more value for crypto users as a platform for decentralized exchanges (DEX’s), lending protocols, synthetic asset trading protocols.”
The success of such DeFi protocols is highlighted by the fact that Aave and Synthetix recently broke into the top-20, passing Tezos and Tron on the way. In fact, many believe that 2020 will see more DeFi coins in the top 20 cryptocurrencies by market cap, a development that will continue to add to the bullish case for ETH.