Recently, the Tetras Capital Hedge Fund played down the Ethereum cryptocurrency and declared that Bitcoin is the more bullish of the two digital currencies. Coincidentally, the announcement seems to have had an impact on the crypto markets, as ETH’s following has faltered considerably while Bitcoin has shown significant improvement.
Usually, the stance of a single investment fund is not sufficient to sway the market’s opinion on a particular digital asset. However, it is proven that bearish calls often capture the attention of some traders, albeit a small portion. Similar to other developments in the sector, negative stances are highly likely to have a ripple effect, and may eventually spread the pessimism on a specific digital currency. Such an outcome was probably the intention of Tetras Capital when they published a comprehensive thesis that classed Ethereum as a coin without a promising future.
In a detailed blog post that featured the thesis mentioned above, Tetras Capital elaborated its reason for going short on the second largest virtual currency. Besides attracting a substantial number of readers, it is obvious that the article’s message has had an impact on the market. Over the past 24 hours, all leading digital currencies have significantly upped in market value, with Bitcoin at the top of the pack. Nevertheless, when compared to Bitcoin, Ethereum has significantly drooped in value. Before the report, 1 ETH was equivalent to 0.072 BTC, but after the release, this rate dropped to 0.068.
As per the Tetras Capital report, Ethereum’s popularity is on a downward spiral. Precisely, the thesis noted that the coin’s previous success was as a result of a combination of irrationality and over-zealousness from investors. Furthermore, the hedge fund added that ETH’s current value is not justified, primarily because the corresponding blockchain’s infrastructure and technology are not up to par.
By adopting a negative stance on Ethereum, Tetras Capital is entirely on a different course with Brian Armstrong, the current Coinbase CEO who is also an outspoken ETH supporter. Of late, the Ethereum network has had its fair share of challenges, with the most notable being the network spamming incidence which caused an upsurge of the blockchain's gas fees as well as an overalls loss worth $15 million.
Previously, there have been multiple instances in which prominent investors have issued bearish calls on particular digital assets that were perceived as popular at the time. For example, Bill Ackman, a renowned hedge fund manager, attempted on several occasions to short Herbalife.
Bill’s efforts, however, ended up in futility, and also tarnished his reputation considerably. The thesis concludes by predicting an imminent network strain on the Ethereum blockchain. Due to this upcoming challenge, Ether will face competition from alternative DApp blockchains, resulting in further depreciation in value.