Bitcoin vs. Ethereum
In this article, I am not attempting to go into the differences between the world’s top two cryptocurrencies or make a case for either being more widely used or better than the other. I am simply going to map out the differences and similarities in recent market action, along with short-term projections, and try to decide which one is better for you as an investor.
This question of Bitcoin versus Ethereum has never been more relevant to traders as they are both offered on regulated exchanges in the form of trusts (GBTC, ETHE) and now futures contracts (BTC, ETH) available through the Chicago Mercantile Exchange. Although the Greyscale Ethereum Trust (ETHE) has been active for over a year, the CME’s launch of their highly anticipated cash-settled Ethereum futures, as well as options, only began trading a few weeks ago. Ethereum is undergoing the sort of validation that Bitcoin experienced in 2017.
If you have followed Bitcoin since futures contracts were launched on the CME, then you would know that the benefits of being on cash a settled regulated exchange came at a steep price. At the start of BTC futures at the end of 2017, Bitcoin fell like a rock from $20,000 on its first day down to $6,000 in only two months and remained on the retreat losing 80% of its value the first year. One of the reasons for this was it allowed hedge funds and large-scale traders to short the market without ever having to touch the digital currency. This meant that there was no longer a learning curve needed to gain entry into the cryptocurrency market, such as security and storage.
So, will this same fate be suffered by Ethereum? I don’t think it is likely, especially if the promises of a sleeker, cheaper, and leaner Ethereum are delivered through Ethereum 2.0 set to launch as soon as next year. If ETH does somehow tank in the coming months, it would have to be on the heels of a declining BTC price. Because regardless of which crypto you prefer, as far as returns, you would have done equally had you bought Bitcoin or Ethereum recently. They both gained approximately 10% yesterday and basically follow the same trend, with Ethereum being the more volatile of the two. BTC is to ETH what gold is to silver.
Ethereum today declined roughly twice the amount as Bitcoin today in price as well as total market cap and in relationship to all-time highs, BTC 17% off its record highs and ETH 28%. On a technical basis, BTC is appearing the most bullish as it managed to bounce off its 21-day exponential moving average, now acting as support while this widely used moving average for fast markets such as these is serving as resistance that ETH has failed to trade above. It is for that reason the shorter-term outlook for BTC is brighter than that of ETH. However, down the road, I expect that to change sometime over the course of this year.
Either way you look at it or side you take good news for either one of these blossoming digital currencies is ultimately good for the other.