Pantera CEO reiterates: Ethereum will move towards deflation, surpassing Bitcoin in market value

Ethereum is about to undergo a major upgrade, with Pantera CEO reiterating that Ethereum will surpass Bitcoin to become the highest-valued cryptocurrency. Factors such as the EIP-1559 proposal, the applications of DeFi, and lower environmental impact will transform Ethereum into a store of value asset.

No Longer Just Bitcoin

During the Reuters Global Market Forum, Dan Morehead, CEO of top venture capital firm Pantera, reiterated his bullish view on Ethereum. Source

EIP-1559

The Ethereum London upgrade is scheduled for 8/5, with the EIP-1559 proposal attracting attention. Morehead pointed out:

The EIP-1559 upgrade will make Ethereum more like a store of value for transactions, you will see a shift in how people use Ethereum over Bitcoin.

Assets can be divided into current assets such as cash, deposits, short-term investments, accounts receivable, prepayments, inventory, etc., and fixed assets such as physical assets like buildings, land, equipment, factories, etc.

Significant Growth in ESG

After the formal merger of Ethereum 1.0 and 2.0, the Proof of Work (PoW) mechanism that has been running for years will be removed from the Ethereum network and replaced by Proof of Stake (PoS). Morehead believes this will significantly reduce Ethereum's energy consumption.

ESG has gradually become a measure for investors to assess whether a company is future-oriented, representing Environmental, Social, and Governance principles.

DeFi Applications

The DeFi sector is almost dominated by Ethereum, so Morehead pointed out that this will further support Ethereum's price.

Although he believes Ethereum is younger and more promising for the future, he remains optimistic about Bitcoin.

Bitcoin to Reach $90,000 This Year

Historically, especially during market downturns, Pantera has continued to be bullish on Bitcoin and Ethereum. Earlier reports estimated that by the end of this year, the price of Bitcoin would reach between $80,000 and $90,000, eventually reaching $700,000 after mainstream adoption.

In fact, in his investor letter in May, Morehead emphasized the same viewpoint, stating that the current market prices are based on the revaluation due to EIP 1559 and the transition to Proof of Stake, with these two updates making Ethereum more deflationary than Bitcoin and eventually surpassing Bitcoin in market capitalization.

However, whether EIP 1559 will lead Ethereum towards deflation is still unknown. Ping Chen, an Ethereum developer, pointed out in his article "A Brief History of EIP1559 for Busy People":

In reality, EIP 1559 does not guarantee deflation. Transaction fees will be burned, but block rewards will still mint new coins, possibly more or less. In the long run, the most stable situation should be oscillating between inflation and deflation.