Next coin to explode is Ethereum, here's why - Frank Holmes
(Kitco News) - Ethereum is going to be the next cryptocurrency to explode to the upside, Frank Holmes, CEO, and CIO of U.S. Global Investors predicts. Ethereum, the second most-valuable cryptocurrency behind Bitcoin, is already up 830 percent for the past year.
Holmes, who is also the Executive Chairman of HIVE Blockchain, spoke to David Lin, Anchor for Kitco News. HIVE Blockchain is the first publicly traded crypto miner listed on the Toronto Venture Exchange.
Holmes compared the phenomena of when there is a run up on gold, and then silver follows -- to the same phenomena happening to Bitcoin and Ethereum. "When gold goes to a 50 day moving average, and it goes up 15-20 percent, silver all of a sudden surges 30 percent. Ethereum is to Bitcoin -- is like silver is to gold," he explained. "Bitcoin makes the big charge, then all of a sudden Ethereum explodes to the upside. That's the sweet spot for us."
"The biggest challenge we have mining for Ethereum is that so many young people have GPU chips for gaming, and they are all mining Ethereum so we get less coins. Our prices are up dramatically from a year ago, but the machines that used to produce 300 Ethereum a day when Ethereum was $300 -- are now producing 80 a day," Holmes emphasized. "Our net revenue or gross revenue is higher because all these gamers around the world are in crypto. Gaming as a whole is a $600 billion business."
Holmes said his biggest concern for Ethereum is that "we are going from proof of work, which is mining and validating the encryption, to proof of stake. But it hasn't happened -- every upgrade -- all it does is shrink the supply outside, but it doesn't stop the demand and people mining for it," he said. "It's actually much more decentralized around the world than Bitcoin miners are."
He explained why he is so bullish on Ethereum. "It is a smart contract -- Ethereum has many more uses than Bitcoin does, the same way silver does -- 20 percent of demand for silver is for solar energy. It has a green footprint, viruses can't live on silver, it has many medical uses, etc.," Holmes added. "The same thing with Ethereum, it is used for DeFi, for NFT'S. It's a much more important backbone for growth in blockchain."
But Holmes said Bitcoin has positive attributes too. "Bitcoin is a store of value. Its greatest asset is its ability to transfer immediately and cheaply versus traditional transfers of money like Western Union. So, remittance between developed nations and developing nations is a classic reason why Bitcoin is a superior way of moving money," he said.
Holmes encourages young and aggressive investors to own both Bitcoin and Ethereum. "Gold is a great trade for the conservative or older investor, but it has lagged the markets on a relative basis for the money printing. Gold should have a projectile potential for $3,000 an ounce in the short period," Holmes said.
For more on Holmes' view on investing, watch the full video above. Follow David Lin on Twitter @davidlin_TV.