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Ethereum is doing far better than Bitcoin in terms of hedging against inflation. The second-largest cryptocurrency by market value is outperforming Bitcoin in the face of the Federal Reserve’s hawkishness going into 2022, said Galaxy Digital CEO Mike Novogratz in an interview on Wednesday.

Bitcoin has a circulating supply of 21 million tokens. The largest cryptocurrency in the world has always been seen as a hedge against inflation. The cryptocurrency became more attractive to traders during the unprecedented easy-money policies that were set to keep the economy afloat during the Covid-19 pandemic. However, Ethereum is pushing to take Bitcoin’s place as the U.S. central bank is becoming aggressive in the combat against inflation.

Bitcoin loses its appeal as a hedge against inflation

Novogratz said during a CNBC interview that as Bitcoin loses its appeal as a hedge against a devalued currency, Ethereum is doing great, especially in terms of the developments of the technology.

"People see ethereum as a technology bet," Novogratz said.  Nonetheless, Bitcoin is still perceived as the dominant digital currency. Despite that Bitcoin’s market share plunged 40%.

Novogratz defended Ethereum’s position and said that it’s more promising in contrast to Bitcoin as the Fed stops adding cash to the economy. The billionaire crypto bull said that he expects a "monster fourth quarter" on the back of a booming economy. 

He also added that stocks are trading more bullishly than crypto.

"Crypto's not trading as bullish as equities because you see this tension, that the Fed's going to take the booze away from the punchbowl much sooner than we thought," Novogratz said in a Wednesday CNBC "Squawk Box" interview. "Broadly that shouldn't be good for risk assets."