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Financial services giant Fidelity forecasts that the use of stablecoins could further differentiate the two largest crypto assets. According to Fidelity’s new report, stablecoin usage on the Ethereum 
$2,468 network will set ETH apart from its Layer-1 competitors and Bitcoin 
$102,881.
Technological Divergence
The report highlights that Bitcoin and Ethereum will continue to diverge technologically in the future. This divergence could lead to different use cases and increase the potential for greater portfolio diversification. Particularly, the rise of stablecoins on Ethereum shows that this platform offers more utility in the sector.
Usage Differences
Fidelity points out that one of the fundamental differences between the two chains is Ethereum’s use for asset transfers and Bitcoin’s role as a long-term investment. In 2023, $3.4 trillion was transferred via Bitcoin, $1.4 trillion via Ether, and $3.5 trillion via Ethereum Layer-1 stablecoins. These figures support Bitcoin’s value storage thesis, indicating that investors often view Bitcoin as a long-term hedge.
The report also states that Ethereum has a significant advantage over other smart contract platforms. Ethereum’s dominant network effects make it difficult for other smart contract platforms to catch up. The broad user base and development community of Ethereum are seen as key parts of this advantage.
At the time of writing, Ethereum’s transaction value was $2,332, while Bitcoin’s was $57,075. Both crypto assets can assume complementary roles in portfolios with different use cases and investment strategies.
In conclusion, the rise of stablecoins and the benefits offered by Ethereum could cause this crypto asset to differentiate from its competitors and Bitcoin. Bitcoin’s value storage thesis relies on investors’ confidence in it as long-term inflation protection. In contrast, Ethereum stands out with its extensive network effects and advantages over smart contract platforms. The two assets can offer various opportunities to investors by assuming different and complementary roles in portfolios.
