Bitcoin vs. Ether: Which One?

Down from roughly 70% of the total crypto market value at the start of the year, Bitcoin now accounts for about 40-45%. It once held about 90% of market value before 2017, but the competition is heating up now.

Source: CoinMarketCap

It all started when a 20-year-old Russian-Canadian named Vitalik Buterin won a grant of $100,000 from the Thiel Fellowship. As a result, he dropped out of college and launched a platform that allows app development on the blockchain known as a “daap”. This platform is now called Ethereum. Ethereum shot up to become a serious competitor, and in only five months, captured a big chunk of the market share in cryptocurrency.

Ethereum is used by the likes of Microsoft Corp for its blockchain offering and has powered the explosive growth in non-fungible tokens. Ether is a blockchain platform that functions like the Apple store or Android app store, whereas Bitcoin is a commodity like gold, or a store of value, said Pat LaVecchia, CEO of Oasis Pro Markets.

Unlike Bitcoin, where many of its core features like its supply cap are baked into the design, the Ethereum platform is evolving. It’s currently going through upgrades that should improve the network, with even a change that will reduce supply. Through offering a greater appeal while limiting its supply, the price of Ether could go up.

Despite the days when Bitcoin was the only crypto option, and which are long gone, it is still the biggest single coin by far. Its market capital is more than USD 1 trillion compared to Ethereum’s USD 400 billion, according to CoinGecko. And it’s still the choice of more big corporates like Tesla Inc and MicroStrategy Inc.

The Risk?

Cornerstone Macro strategists studied how Bitcoin and Ether would likely perform in a downturn. With a slide of 20% in the Bloomberg Galaxy Crypto Index, there’s notably more downside risk to Ether than its larger compatriot. But with a rise of 20%, you don’t really get the concomitant upside to Ether compared to Bitcoin, according to strategist Benson Durham.

Joanna Ossinger from Bloomberg advises that anyone who goes into cryptocurrencies needs to be comfortable with the price swings, which can be substantial even with the most-established ones. There have also been periodic issues with exchanges being hacked or going under. Regulation risk needed to be considered, which may affect its prices. Still, for those wanting to invest in crypto, there’s an argument to buy both as part of the age-old search for diversification and hedges. But be clear that this is a highly volatile asset class and we are not advocating for you to invest or otherwise.

 

Disclaimer: Information contained on this article is not intended as, and shall not be understood or construed as, investment advice. We are not recommending any investment nor accept any liability or loss for the cryptocurrencies mentioned above.

 

Reference:

1.     Joanna Ossinger, How to decide whether to invest in Bitcoin or Ether, 6 May 2021, Bloomberg

2.     Bitcoin or Ether: Which Crypto Is a Better Investment? 11 May 2021, Nasdaq