• Despite recent underperformance, ether is potentially a contrarian bet into the year-end, the report said.
• Bitwise noted that the majority of stablecoins are issued on the Ethereum blockchain and more than 60% of all DeFi assets are locked on the network.
• Ethereum is like the Microsoft of blockchains, the asset manager said. Ether (ETH), the second-largest cryptocurrency, seems to be liked by nobody right now, but the native token of the Ethereum blockchain's underperformance could reverse as the year draws to a close, Bitwise said in a report on Tuesday.

The asset manager noted that year-to-date ether is little changed, while bitcoin (BTC) is up 38% and Solana's sol (SOL) has risen 31%.

Ether's recent underperformance stems from risk related to November's U.S. presidential election, rising competition from Solana and other blockchains, challenged tokenomics and a mixed response to the introduction of spot exchange-traded funds (ETFs) in the U.S., the report said.

Still, it's not all doom and gloom. The majority of stablecoins are issued on Ethereum, more than 60% of all decentralized finance (DeFi) assets are locked on the blockchain and the popular prediction market Polymarket also settles on the layer-1 chain, Bitwise noted.

"Ethereum has the most active developers, the most active users, and a market cap that is 5X bigger than its closest competitor," wrote Matt Hougan, chief investment officer at Bitwise.

"It's like the Microsoft (MSFT) of blockchains," Hougan wrote. Everyone wants to talk about about newer companies and their game-changing tech such as Google (GOOG), Slack (WORK) and Zoom (ZM), "but Microsoft is still larger than all of them put together."

Ether's challenges are not "existential" and the market may reuate the cryptocurrency closer to the U.S. election. "It looks like a potential contrarian bet through the end of the year," the report said.

Read more: Will Ether's Supply Crunch Lead to Higher Prices in Q4?

Edited by Sheldon Reback.