Ethereum is outperforming bitcoin because its a technology bet rather than a bet on inflation, says crypto bull Mike Novogratz

• Mike Novogratz said Wednesday that ethereum is attractive as a bet on the technology versus bitcoin's appeal as an inflation hedge.
• The crypto bull said ethereum is outperforming bitcoin as the Fed looks to tackle inflation.

Ethereum is outperforming bitcoin as the latter becomes less attractive as an inflation hedge in the face of the Federal Reserve's hawkishness going into 2022, said Galaxy Digital CEO Mike Novogratz in an interview on Wednesday.

With a fixed supply of 21 million, many investors have long seen the world's biggest cryptocurrency as a hedge against inflation, especially in the face of unprecedented easy money policies intended to keep the economy afloat during the COVID-19 pandemic. That could be challenged, however, as the US central bank turns hawkish to combat inflation next year.

Speaking on CNBC, Novogratz said that as bitcoin loses some of its appeal as a hedge against a devalued currency, ethereum is outperforming as its proponents see the potential in the solutions enabled by the underlying technology.

"People see ethereum as a technology bet," Novogratz said. While bitcoin remains the most dominant cryptocurrency, its market share has dipped to about 40%, down from 70% as investors turn to other digital assets.

For Novogratz, ethereum becomes more promising compared to bitcoin as the Fed stops pumping cash into the economy. The billionaire crypto bull said that in any event, he expects a "monster fourth quarter" on the back of a booming economy.

He also laid out his prediction of a continued bull run in stocks, which he added are trading much 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."