Image Source: Pixabay
 

Bitcoin or Ethereum  

Bitcoin and Ethereum are the two largest cryptocurrencies by market capitalization - they accounted for 40.7% and 20.9% of total crypto market capitalization respectively as of August 3, 2022. For investors considering Bitcoin or Ethereum from an investment perspective, it is an important question: will Ethereum pass Bitcoin?

Both Bitcoin and Ethereum are cryptocurrencies based on blockchain technology. However, Bitcoin is essentially a digital currency. Ethereum, on the other hand, is also a ledger technology that companies are using to build new programs

Ethereum offers a trustworthy general-purpose computing platform that is decentralized and publicly available. Businesses can use the feature of the Ethereum network that allows the building and running of their own programs. This important feature is implemented by native smart contract functionality incorporated into the Ethereum network. Smart contracts are computer programs that automate actions when predetermined criteria are met. They run on the Ethereum Virtual Machine (EVM) and are a key feature of the Ethereum blockchain.

So businesses can use the Ethereum decentralized network to collaborate, share and protect data by automating processes. And this puts Ethereum apart from Bitcoin which is essentially just a digital asset. 

Therefore many investors bet that Ethereum will overtake Bitcoin as the dominant coin in the market as Ethereum adoption by businesses rises. The chart below reflects the market capitalization of various cryptocurrencies. 

Chart 1: Crypto Market Capitalization

(Click on image to enlarge)

 A visual inspection of the chart reveals that Bitcoin is the most popular crypto asset. It is important to understand what is Bitcoin before investing in any cryptocurrency since it is considered long-term wealth storage by holders. And the answer to the question - Bitcoin or Ethereum (at least for investment purposes and from a liquidity perspective) appears to be Bitcoin currently – it accounts for over 40% of market capitalization while Ethereum only for over 20%.

At the same time the answer to the question of - will Ethereum pass Bitcoin – is a qualified “yes”. While the market cap of Ethereum has varied in the 10%-20% range in the past years, the dynamics in the last couple of months are positive. The Ethereum market cap has risen from 14.8% on June 1 to 20.7% on August 1. Bitcoin market cap fell from 43.8% to 40.7% in the same period. Continuation of this dynamics will help Ethereum catch up with Bitcoin in terms of market cap and then surpass it in the long-term perspective.
 

Bitcoin (BTC) Price Analysis For The Rest of 2022

The Bitcoin price analysis on BTCUSD daily chart below indicates Bitcoin attempted a rebound in the first four months of 2022 but then resumed retreating that started after it hit an all-time high in November 2021.

Chart 2: BTCUSD, Daily    

(Click on image to enlarge)

Bitcoin is in a bear flag in a downtrend currently, and most likely it will break out from the flag and the price will be lower by the end of 2022.
 

Will Ethereum Pass Bitcoin? Ethereum Price Analysis 

The Ethereum price analysis on ETHUSD daily chart below indicates similar dynamics: Ethereum attempted a rebound in the first four months of 2022 but then resumed retreating that started after it hit an all-time high in November 2021.

Chart 3: ETHUSD, Daily 

(Click on image to enlarge)

  Ethereum tested the 61.8 resistance level of the Fibonacci extension and retraced lower. Most likely the price will be lower by the end of 2022.
 

What About Buying Ethereum or Bitcoin in 2022

The chart below displaying the percentage price change for Bitcoin and Ethereum over a four-year period of August 2018-August 2022 using IFC Market’s NeTradeX platform will help answer the question - should I invest in Ethereum or Bitcoin?

Chart 4: ETHUSD & BTCUSD Percentage Price Change

(Click on image to enlarge)

A close inspection of the percentage price change chart on a weekly timeframe reveals that Bitcoin and Ethereum move mostly together: when Bitcoin rises Ethereum rises too, and when Bitcoin falls Ethereum falls too.

And that is not surprising, as the top two cryptocurrencies account for about two third of total crypto market capitalization and are subject to the same market risks which explain the high correlation between their prices. 

At the same time, another feature stands out: Ethereum price changes are bigger in magnitude generally compared with the Bitcoin price changes.  Ethereum percentage price increase is generally bigger than the Bitcoin percentage price increase in the same period, and  Ethereum percentage price decrease is generally bigger than the Bitcoin percentage price decrease in the same period. In other words, Ethereum's price is more volatile compared to Bitcoin's. 

So from the trading perspective the answer to the question - Of bitcoin or Ethereum - is Ethereum: a trader stands to profit more from bigger changes in Ethereum price.   

And when one considers Bitcoin or Ethereum long-term, Ethereum provides a better investment alternative taking into account the rising acceptance of the Ethereum network by businesses.
 

Conclusion

The Bitcoin price analysis and Ethereum price analysis help us answer the question of- is Ethereum better than Bitcoin - from different perspectives. From a trading perspective, Ethereum appears to be more volatile – its percentage price changes are much bigger than percentage price changes in Bitcoin prices over the same time periods.

So from trading perspective higher profits can be made from Ethereum trading compared with Bitcoin trading. Of course, it should be kept in mind that together with the opportunity for higher profits higher volatility entails also higher risks for losses. Therefore caution is advised to minimize possible losses due to higher volatility.

The answer to the question - will Ethereum pass Bitcoin and will Ethereum go up like Bitcoin – is yes, most likely. Ethereum network allows businesses to build and run their programs through the smart contract capability inherent to it. 

Businesses can use the Ethereum network to cooperate, share data and create marketplaces. There are business associations that promote the adoption and development of the Ethereum network.

The Enterprise Ethereum Alliance (EEA) is the biggest and most well-known organization comprising Fortune 500 enterprises and startups including  J.P. Morgan, Microsoft, Banco Santander, Intel, BNY Mellon, CME Group, and several others. They are leading efforts to drive industry adoption and develop new business opportunities. 

The adoption of Ethereum will widen as more businesses see new opportunities and benefits for improved efficiency from using  Ethereum technology in their daily business operations. Therefore Ethereum can pass Bitcoin.

And from a long-term perspective, the answer to the question of - will Ethereum go up like Bitcoin - is yes, most likely, for the above-mentioned reasons.

The one advantage Bitcoin has over other cryptocurrencies is its higher liquidity. At the same time, Ethereum has the second-largest market capitalization and its liquidity will rise in the long-term perspective.

More By This Author:

Bitcoin Falls After Failing To Rebound Above $41,450
Oil Prices May Rise Due To An Accident At A Terminal In The Black Sea
Will BTC Decline Impact Crypto Market Overall? What Is Next?