Is Ether ($ETH) a Better Long-Term Bet Than Bitcoin ($BTC)?

Although both $BTC and $ETH are currently down roughly 75% from their all-time highs (which were reached in November 2021), quite a few recent tweets and articles about these two cryptocurrencies suggest that the general perception in the crypto community is that the latter is probably a better long-term bet.

It is difficult to definitively say whether Ether (ETH) is a better long-term bet than Bitcoin (BTC). Both cryptocurrencies have their own unique characteristics and have performed well in the past, and it is ultimately up to individual investors to decide which one aligns more with their investment goals and risk tolerance.

One argument in favor of Ether as a long-term investment is its potential for wider adoption. While Bitcoin is primarily used as a store of value and a means of exchange, Ether has the added use case of powering smart contracts on the Ethereum platform. This makes Ether an attractive investment for those who believe in the potential of decentralized applications (dApps) and the wider adoption of blockchain technology.

Another argument in favor of Ether is its strong developer community and support. Ethereum has one of the largest and most active developer communities in the cryptocurrency space, which has contributed to the platform’s ongoing evolution and growth. This strong community support can provide a level of stability and security for Ether investors.

However, it is worth noting that Bitcoin also has a strong developer community and has proven to be a resilient and secure cryptocurrency over the years. Bitcoin has the advantage of being the first and most well-known cryptocurrency, which gives it a level of brand recognition and mainstream visibility that Ether does not yet have. Additionally, Bitcoin has a limited supply of 21 million coins, which gives it a level of scarcity that can make it a more attractive store of value for investors.

On Thursday (5 January 2023), Mike McGlone, a Senior Macro Strategist at Bloomberg Intelligence (Bloomberg’s research arm on the Bloomberg Terminal”), shared his outlook for Bitcoin and Ethereum.

In the January 2023 edition of Bloomberg Intelligence’s “Crypto Outlook” report, McGlone (and the two contributing analysts he worked with on this research) said:

“Ethereum’s upward performance vs. Bitcoin has been unshaken by 2022 deflation in most risk assets and may be gaining underpinnings. At a ratio of about 0.07, the Ethereum/Bitcoin cross rate is the same as in May 2021, when the Nasdaq 100 Stock index was about 20% higher.

“Our graphic shows the enduring trend of the No. 2 crypto outperforming No, 1, which appeared coincident with the rise of risk assets. The 2022 drop of about 30% in the index is part of a receding tide, including about a 70% decline in Ethereum. Migration into the mainstream is our takeaway, and once the dust settles from some reversion in risk assets amid inflation pressure, Ethereum appears more likely to resume what it’s been doing — outperforming.“

The popular pseudonymous host of crypto market analysis show “Coin Bureau” says that if the Shanghai upgrade goes well, “2023 could be a really big year for Ethereum and for ETH.” 

According to a report by The Block, at Ethereum Core Devs Meeting #151, which was held on 8 December 2022, a provisional timeline for the completion of the Shanghai upgrade, also known as Ethereum Improvement Proposal (EIP) 4895, was set. This upgrade will enable users to withdraw their staked funds from the Ethereum blockchain, a feature that is currently not available. According to Cointelegraph, “developers will aim for May or June 2023 to launch the Ethereum Improvement Protocol (EIP) 4844 upgrade that will introduce proto-danksharding to the network.”

Last month, Coin Bureau released a video update (titled “Q&A: ETH Predictions, BTC & Crypto Market in 2023!”) and according to a report by The Daily Hodl, the host of the show had this to say about the potential impact of the upcoming Shanghai network upgrade and the overall outlook for Ethereum in 2023:

“When they see that that ETH can in fact be unstaked and easily sold, then it might incentivize them to actually stake themselves. So I really think it could go either way. Now, I wouldn’t at all be surprised if it was slightly bearish in the short term if we do see some selling. But I think the future for ETH is so, so bright, and I think Shanghai, assuming it goes off without a hitch as the merge did, then I think 2023 could be a really big year for Ethereum and for ETH...

“Price prediction, I don’t know… I don’t think we’re going to see a five-figure ETH in 2023, but I think that’s entirely possible. We could, of course see, a flippening, but I’m not sure. I’m expecting very much kind of sideways price action for ETH over the course of next year.“

https://youtube.com/watch?v=5zXIGDKx3Js%3Ffeature%3Doembed

On 19 August 2022, Real Vision Founder and CEO Raoul Pal took to Twitter to say that although he does not expect the Ether price to reach “new lows” (i.e. go below the June 18 low of $902), there could be a “gut-check quick drop”; however, he also pointed out that for him “new lows” means that he will buy even more $ETH since he finds Ether’s “2-year risk/reward” quite attractive.

Essentially, Pal believes that at worst, $ETH could fall to the $800-$900 range, but the upside is much bigger since — as he has said in the past — he expects the $ETH price to reach $20,000 in the next couple of years.

One popular crypto analyst who agrees with Pal’s view that Ethereum will outperform Bitcoin in the next few years is Ben Armstrong, who told his over 880K Twitter followers that he expects $ETH to have a higher market cap than $BTC by 2025:

Of course, there are those who believe that Bitcoin might in fact be the best store-of-value asset and that as this view becomes more widely held, the price for one Bitcoin in the next 10 years could easily reach $1 million (something which ARK Invest CEO Cathie Wood believes) and maybe even go as high as $23 million (as Blockware Solutions seems to be believe).

Regardless of which of these two cryptocurrencies has more price increase potential in the long term, one thing that seems undeniable is that Bitcoin has much higher regulatory clarity in the U.S. than Ether since both former SEC Chair Jay Clayton and current SEC Chair Gary Gensler have on several occasions have confirmed that they consider Bitcoin to be a commodity rather than a security and therefore outside their purview. Sadly, the same cannot be said about Ether.

Apart from what William Hinman, a former Director of the SEC’s Division of Corporation Finance, said during a speech in June 2018, the SEC’s position is that it has never in any official form stated that Ethereum is a commodity or a security, i.e. it is possible (especially if Ripple Labs loses the on-going lawsuit started against it by the SEC in December 2020) that any day in the future the SEC could decide to declare that Ether is a security, which could have a huge negative impact on its price since crypto exchanges in the U.S. would then have to delist it.

So, although we can’t be certain which of these two cryptocurrencies is a better long-term bet as far profit potential is concerned, at this stage, with the lack of regulatory clarity that we currently have in the U.S., the safer long-term bet seems to be Bitcoin.

It is important for investors to carefully consider their individual goals and risk tolerance before making a decision. It may be helpful for investors to diversify their portfolio by including both Ether and Bitcoin, as well as other cryptocurrencies and traditional assets. It is also important for investors to be aware of the inherent risks of investing in cryptocurrencies and to carefully research and understand the assets they are considering before making any investments.

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