Fidelity director says ether is undervalued – here’s why

Jurrien Timmer, global chief macro officer at mutual fund giant Fidelity Investments, argued in a recent tweet that ether was undervalued compared to Bitcoin.

If one compares the valuation of BTC with the ETH, we see a big discount for the ETH, presumably because investors reward BTC for its superior scarcity dynamics. It will be interesting to see in 2022 whether ETH will continue to catch up with BTC. /END pic.twitter.com/TVrWXr8Mfk

– Jurrien Timmer (@TimmerFidelity) December 17, 2021

“Comparing the valuation of BTC to ETH, we see ETH much lower, probably because investors see the driving force of BTC as scarcity. It will be interesting to see in 2022 whether ETH will catch up with BTC. “

Timmer’s analysis is based on the rapid growth of the Ethereum network. He found that Ethereum clearly outperformed Bitcoin.

According to Timmer, the progress made by Ethereum in “flipping” Bitcoin will be very interesting to watch over the next year.

Ether far outperformed Bitcoin this year, ETH / BTC posted 260% growth, this was noticed by the explosion of NFTs and the wider DeFi environment.

Bitcoin has also suffered from growing concerns about its carbon footprint. Last month, JPMorgan analyst Nikolaos Panigirtzoglou said the move to Proof of Stake (PoS) makes Ethereum a better choice than Bitcoin.

Timmer believes investors will continue to view Bitcoin as a superior store of value due to its scarcity. It benefits from near zero interest rates and the monetary easing that began with the outbreak of the Covid-19 pandemic.

Although Ethereum recently had its first deflationary week after the EIP-1599 update, there are nagging concerns about its volatile monetary policy.

More than just stock-to-flow

Timmer doesn’t think Bitcoin price will go up because of the stock-to-flow (S2F) model. He believes in Metcalfe’s Law, which says that the value of a network is proportional to the growth of its users.

“Bitcoin fundamentals explain a lot of the price growth. Metcalfe’s Law in Action. It’s not just about S2F. “

Timmer expects user growth to remain the main driver of Bitcoin price.

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