Morgan Stanley Report: ETH Could Have a Larger Market Than BTC

According to a Morgan Stanley analyst Denny Galindo, Ethereum (ETH) could ultimately have a larger market than Bitcoin (BTC).

Morgan Stanley strategist Denny Galindo makes a case that Ethereum is very different from other crypto assets, and it can be considered as a separate investment from the largest digital asset by market cap, Bitcoin.

The report states Ethereum shares two essential characteristics with Bitcoin: it is a decentralized currency and the element of digital scarcity. However, Ethereum’s utility could be more than being a means of payment or store of value because it is becoming attached to a “larger collection of activities.”

Referencing the fact the majority of decentralized applications (Dapps) are built on the Ethereum blockchain and the rapidly growing non-fungible tokens (NFTs) space, Morgan Stanley investment strategist Denny Galindo argues that Ethereum “has a potentially bigger market” than Bitcoin.

The report also makes a case that Ethereum may be integrating with traditional financial markets, noting how ETH’s correlation with the stock market is nearly double that of BTC.

“While Ethereum and Bitcoin have had a 0.70 correlation to one another since December 2018, Ethereum has been nearly twice as correlated to the S&P 500, at 0.26, versus 0.14 for Bitcoin… If these correlations hold, replacing some Bitcoin exposure with Ether might actually make a portfolio more correlated to equities.”

Correlation of 1 is 100% correlated, and the closer the value is to 1 means higher level of correlation.

Galindo elaborates in his report that his views on crypto, and that it is not going to go away.

“We make no recommendation whether to buy or sell Ether… We do not see this asset class disappearing… The faster we can get educated, the faster we can understand how cryptocurrency may fit into some, though not all, portfolios.”