According to a report from crypto asset management firm Bitwise on Tuesday, as reported by CoinDesk, Ethereum (ETH) is currently facing headwinds despite its dominance, but this underperformance may reverse by year-end.

Bitwise highlighted that ETH’s price has been relatively stagnant year-to-date, while Bitcoin (BTC) has surged 38% and Solana’s SOL has climbed 31%. The report attributed ETH’s recent underperformance to risks associated with the November US presidential election, growing competition from Solana and other blockchains, a challenged token economics, and mixed reaction to the launch of US spot Ethereum exchange-traded funds (ETFs).

However, the situation is not entirely bleak. Bitwise pointed out that the majority of stablecoins are issued on Ethereum, over 60% of decentralized finance (DeFi) assets are locked on the blockchain, and the popular prediction market Polymarket settles on the Layer 1 chain. Bitwise CIO Matt Hougan wrote:

“Ethereum has the most active developers, the most active users, and a market cap five times larger than its nearest competitor.”

Hougan further compared Ethereum to “the Microsoft of blockchains”, where everyone likes to talk about newer companies and their game-changing technologies like Google, Slack, and Zoom, “but Microsoft is still bigger than all of them combined.”

The report from Bitwise concludes that Ethereum's challenges are not "existential", and the market might reassess the cryptocurrency as the US election approaches, suggesting "it looks like a potential contrarian bet for year-end."