In a recently published report, investment bank Morgan Stanley has carried out an analysis of the two main cryptocurrencies, concluding that it is cheaper to invest in Bitcoin than Ethereum.
Morgan Stanley prefers Bitcoin
After criticizing Bitcoin and cryptocurrencies, it seems that the bank has radically changed its mind on Bitcoin, considering it an established asset destined to last. It did however criticize Ethereum as less decentralized than Bitcoin and increasingly struggling in the face of the advance of dangerous competitors, such as Avalanche, Cardano and Solana.
“High transaction fees create scalability issues and threaten user demand”.
The report reads, where analysts add that high costs still make the Ethereum platform too expensive for small-value transactions.
Bitcoin less volatile and more decentralized
According to Morgan Stanley‘s analysts, despite Ethereum’s greater gains in 2021 compared to Bitcoin, the latter is definitely to be preferred because it is less volatile than the former. According to the report, since 2018 BTC has been 30% less volatile than Ethereum.
Bitcoin’s network requires fewer transactions than Ethereum‘s and this makes it more scalable and cheaper compared to its rival, and most importantly its dominance is not yet in danger as opposed to Ethereum‘s, which already declined in 2021 compared to new dangerous competing blockchains that are more scalable and cheaper.
Bitcoin is preferred by Morgan Stanley for its greater decentralization compared to Ethereum, considering that the top 100 ETH addresses hold 39% of the currency, compared to 14% for the top 100 BTC addresses.
ETH dominance declining
While the dominance of the NFT and DeFi market is still firmly in the hands of the Ethereum blockchain, which still holds around 60% of the market, the trend speaks of its descent in favour of other more convenient blockchains, such as Solana, Cardano and Avalanche.
According to the investment bank’s analysts, this trend will continue and consolidate in 2022, putting the primacy of ETH in terms of developers and dApps, at great risk. In addition, the Morgan Stanley report notes that new regulations likely to come into force for DeFi and NFT market participants could lead to a reduction in demand for transactions on the network.