Bloomberg Crypto Strategist Predicts Significant Ethereum Impact from PayPal's USD Stablecoin

Bloomberg Intelligence Analyst Jamie Coutts Foresees Significant Ethereum Impact from PayPal's PayPalUSD (PYUSD) Stablecoin

Coutts Highlights Enormous Growth Opportunity for Ethereum Through Adoption of PayPal's Stablecoin

According to Coutts, Ethereum holds vast growth potential, even with a minor portion of PayPal's extensive customer base embracing the stablecoin. Designed to maintain a 1:1 peg with the US dollar and established on the Ethereum platform, this stablecoin could bring substantial transformations.

"The impact of PayPal's announcement is not yet fully accounted for. With 435 million active PayPal accounts compared to Ethereum's 1 million active addresses across Layer-1 and Layer-2, the conversion of a mere 1% into PYUSD (approximately 4.35 million users) could usher in profound consequences for both the Ethereum ecosystem and the ETH asset," Coutts explains

Source: Jamie Coutts/X

Coutts Expresses Optimism for Ethereum Layer-1 (L1) Smart Contract Platform Following Positive L2 Project Expansion Outcome

Coutts further emphasizes his positive stance on the Ethereum layer-1 (L1) smart contract platform, given that the expansion of layer-2 (L2) projects had a more favorable impact on ETH's financials than initially anticipated.

"The unexpected combination of accelerated L2 adoption and a lesser-than-expected impact on L1's financials bolsters our belief in Ethereum's capability to gather greater value throughout the cycle compared to alternative L1 solutions," Coutts affirms.

Source: Jamie Coutts/X

The analyst highlights that ETH's sideways price movement doesn't provide a comprehensive view of the dynamic ecosystem, encompassing ongoing network advancement and heightened Ethereum staking.

"Underlying Progress Despite Stable Prices:

  1. Network Expansion Gains Momentum Driven by Growing L2 Solutions and Relaxed Monetary Policy

  2. Persistently Deflationary Despite Bearish Market Conditions (pre-merge inflation exceeded 4%)

  3. ETH Staking Sees Remarkable 38% Surge in Three Months, Despite Activity Deceleration."

Coutts further explains that amid the subdued crypto market, the accumulation of ETH is witnessing an upswing.

"While activity experiences a decline, investors are displaying robust accumulation tendencies. The count of non-zero balance addresses surpasses 100 million, with more than 1.7 million wallets holding a minimum of one ETH.

Source: Jamie Coutts/X

Coutts Observes Ethereum Network's Revenue Surges 3x from Q4 2022 Levels

"Considering different perspectives, the network's GDP/revenue in dollar terms, although notably lower than 2021, has surged by 3 times since the low point of Q4 2022, now surpassing the price trend. Ethereum's layer-1 (L1) is currently generating around $6 million in daily fee revenue, with 80% being utilized for burning (buyback) and the remainder allocated to validators (dividend distribution)."

Source: Jamie Coutts/X

He also highlights that the fee surge resembles a pattern from 2020 that contributed to an Ethereum bull market.

"In 2023, fees have soared by 176%, compared to a 53% price increase. This correlation draws parallels with the prior bullish phase, where fees outpaced the price in 2020 following a two-year decline."

Source: Jamie Coutts/X

At the time of writing, Ethereum is being traded at $1,850, reflecting a minor 0.1% decrease over the past 24 hours.

Aug 11, 2023

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