Bitcoin vs Ethereum - which is a better investment?
In the stock market, every investment is compared to the performance of the S&P 500 index. This is the index that shows the market as a whole. If an investment we made in a company or exchange-traded fund underperformed the S&P 500, then our investment underperformed the market and we would have been better off investing in the S&P 500. If the investment has outperformed the S&P 500 for us, we've "beaten the market."
In investing in cryptocurrencies, we have the same thing with Bitcoin. It drives the market, and when we talk about investing in any cryptocurrency, we must necessarily compare it to BTC. If we invested in something that performed worse than it, then it was better to invest directly and only in BTC. All these cryptocurrencies had some kind of peak against BTC at the beginning, which was never reached after that. Usually, this peak is when there is the strongest marketing and the most people promoting the project in question. Since the team almost always keeps some of the cryptocurrency for themselves, the target many times is the people on the team, etc. insiders to sell ordinary people their own share at the highest possible price and generate profit by taking advantage of the crypto craze. After that, the project slowly died, although it continues to be supported only by deluded fans who think they have invested in something meaningful. And the truth is that they were simply "the greatest fools." The bottom line is that if a person had bought Bitcoin during this period and had not been chasing the "next Bitcoin", then the value of their portfolio would now be much higher. Probably at least 99% of all crypto projects only aim to get our bitcoins by selling us their meaningless token that is guaranteed to slowly go down.
The highest value of ETH against Bitcoin was 0.15 BTC during the so-called ICO boom since 2017. If over time its price rises relative to Bitcoin, it means that Ethereum is developing better and is a better investment than Bitcoin. At the beginning of 2018, it tried to make a new high, but only reached 0.11 BTC per 1 ETH. And during the bull market of 2021, it reached only 0.088 BTC per ETH. And now, before and after the "merge"—the biggest and most hyped event surrounding Ethereum since its inception, where the second largest blockchain switches from Proof-of-Work to Proof-of-Stake, ETH reached 0.084 BTC . ETH continues to make lower and lower highs against BTC. This is not a good sign. We can also look at its performance not only against Bitcoin but also against all cryptocurrencies, i.e., its share in the entire crypto ecosystem. The situation there is not so dramatic, but it is still seen that Ethereum is not able to reach its previous peak of 2017, when it reached 31% of the entire market capitalization, and now hovers around 20%.
Ethereum already has too many competitors, and given its controversial decentralization after the crunch and its move to Proof-of-Stake, it may now be even easier for those competitors to grab additional market share from it. Until now, Ethereum appeared as a kind of alternative to other smart contract platforms that mainly used Proof-of-Stake, but it no longer stands out so much from them. It's also unfinished. It still needs a lot of major updates to its code in the coming years, and it's already more centralized than even they. When making a long-term investment in cryptocurrency, there is no reason to invest in a project that loses value relative to another crypto project. If this trend continues, it will certainly be a losing position. Therefore, it seems more reasonable to bet on the stronger digital asset from a historical perspective. Of course, one can speculate in the short term with Ethereum, as with any other crypto project, but in the long term, it is better to move our profit and lock it in Bitcoin. It has been in first place for 12 years now, and it is quite likely that it will retain its position for the next 12 years as well. Something that cannot be said for the remaining top ten projects, not even Ethereum.