Fidelity, one of the leading digital asset management platforms catering to institutional investors, has expressed its bullish stance on Ethereum for the long term. Despite Ethereum already experiencing a 50% surge in value since the beginning of the year, Fidelity Digital Assets remains optimistic about the premier altcoin’s future prospects.
So, what are the reasons behind Fidelity’s positive view on Ethereum? One significant factor contributing to Fidelity’s confidence is Ethereum’s burn rate now surpassing its issuance. Following the “Merge,” the net supply of Ether has decreased by over 700,000 coins, according to Fidelity’s recently published Q2 2023 Signals Report. This reduction in supply adds to Ethereum’s desirability and potential value in the eyes of Fidelity.
Additionally, Fidelity finds optimism in the second-quarter increase of active Ethereum validators by 15%. This growth in validators aligns with the anticipated benefits of the EIP-1153 update, which promises improved cost-effectiveness and operational efficiency. Fidelity believes that the successful implementation of this update could unlock further upside potential for Ethereum.
The report also mentions the concept of “New Address Momentum” as another contributing factor to Fidelity’s positive long-term view on Ethereum. This refers to the increasing number of new Ethereum addresses being created, indicating growing interest and adoption of the cryptocurrency.
Interestingly, a recent CryptoVantage survey revealed that around 46% of Americans expect Ethereum to eventually surpass Bitcoin in terms of market capitalization. This sentiment aligns with Coinshares’ findings, as they confirmed that Ethereum remains the most significant holding in investors’ portfolios, despite underperforming Bitcoin this year.
Furthermore, Ethereum might benefit from the U.S. Federal Reserve’s signals of a potential shift in monetary policy. A more lenient approach by the Federal Reserve tends to stimulate interest in riskier assets, such as cryptocurrencies. However, it’s worth noting that Ethereum has witnessed a downward trend in recent sessions ahead of the central bank’s announcement on Wednesday.
In conclusion, Fidelity Digital Assets maintains a bullish outlook on Ethereum for the long term. Factors such as the burn rate surpassing issuance, increased active validators, positive sentiment among Americans, and Ethereum’s status as the largest holding in investors’ portfolios contribute to Fidelity’s confidence in the altcoin’s future potential. Despite short-term fluctuations, Fidelity believes that Ethereum has promising prospects in the evolving digital asset landscape.