Jurrien Timmer, global macro director at mutual fund giant Fidelity Investments, argued in a recent Twitter thread that Ether, the second-largest cryptocurrency, is undervalued compared to Bitcoin.
Despite the choppy price action this year, Bitcoin’s network continues to grow unabated. Per Metcalfe’s Law, I expect that this growth will continue to underpin bitcoin’s valuation. (THREAD) pic.twitter.com/lSZ5FUgoXn
— Jurrien Timmer (@TimmerFidelity) December 17, 2021
Timmer’s analysis is based on the rapid growth that the Ethereum network has experienced. Timmer states that Bitcoin is significantly behind its rival.
According to Timmer, it will be interesting to watch in 2022 whether Ethereum continues to catch up with Bitcoin.
Ethereum has far outperformed Bitcoin this year, posting a massive 260% gain against the crypto leader. The top altcoin has gained attention due to the NFT boom and the sprawling decentralized finance (DeFi) landscape.
Bitcoin has also suffered from growing concerns over its carbon footprint. Last month, JPMorgan analyst Nikolaos Panigirtzoglou said that Ethereum’s upcoming transition to proof-of-stake (PoS) makes it a better bet than Bitcoin.
Timmer also assumes that investors continue to view Bitcoin as a superior store of value due to its limited supply. The disinflationary cryptocurrency has benefited tremendously from the near-zero interest rates and monetary easing that began at the start of the pandemic.
Besides, Timmer believes that Bitcoin’s price increase is not solely attributed to the stock-to-flow model. He believes that Metcalfe’s law, which states that the value of a network is proportional to user growth, also applies:
“Bitcoin fundamentals explain most of the meteoric price gains. Metcalfe’s Law at work. It’s not just about S2F (stock streaming).”
The Fidelity executive expects user growth to continue to be the main driver of Bitcoin price.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.