When someone mentions crypto, the first one that comes to mind is Bitcoin, right? And that’s quite normal because it was the very first one to be created by the mysterious Satoshi Nakamoto.
As you know, it’s obviously not the only crypto and today we’re going to look at the second biggest in terms of market capitalization, Ethereum.
Disclaimer: Our content is intended to be used and must be used for informational purposes only. It is very important to do your own research and analysis before making any investment based on your personal circumstances.
First of all BTC, Bitcoin was created to serve as a currency and therefore allow the transfer of capital at a lower cost, which is actually the case. Without going into too much technical detail, that’s pretty much all BTC is for, at least at the very beginning.
BTC at the beginning is also an ideology, the resumption of financial power by the masses against the institutional system in place! It’s still an ideology in 2021 but crypto is now much more accepted and Bitcoin serves as a mascot!
Bitcoin for years now has especially become a store of value, sometimes compared to gold because of its scarcity since there will be at most 21 million Bitcoin. Some are already lost and with the halving mechanism, which reduces the reward given to miners by half, this reinforces the feeling of scarcity.
ETH could be seen as a store of value as well, but this is not its primary function. Indeed, ETH is the first crypto to have included smart contracts, which are in a way the foundation of any application that is based on a blockchain.
To use smarts contracts, the user must pay fees in the form of GAS. Since most of the DeFi applications are based on ETH, the transaction fees have quickly risen to new heights in the last few months. From a purely user case point of view, we can say that ETH is ahead of BTC.
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Which one to invest in?
This is obviously not financial advice, but if we had to choose between ETH and BTC now, what would we do?
The easiest way is to analyze the chart of the ETH/BTC pair. On the chart below, we can see that the prices have just broken (weekly horizon) a major zone between 0.037 and 0.041 and a new high point is registered.
What can explain this strength of ETH?
Certainly, the recent Berlin hard fork that incorporates four optimizations aimed to improve gas efficiency and security has made a significant contribution.
In addition, the next hard fork greenlit for July 2021, called the London hard fork boosted confidence amongst investors. This should bring a reduction of fees and a postponement of the difficulty bomb for ETH 2.0. From a purely technical point of view in any case, ETH is well on its way to gaining ground on BTC.
Evident in On-Chain analysis metrics, the Ethereum NUPL indicates that there is ample room for growth for ETH. Since November 2020, the highest value reached was 0.734 when ETH was trading at around $1,953. Despite ETH having charted a new all-time high, the current ETH NUPL value is 0.718. Considering the previous 2017 peak of 0.96 and 2018 peak of 0.912, it is evident that the likelihood of growth in ETH is inevitable.
However, will the above be enough for Ethereum to dethrone Bitcoin? It’s not a sure thing but maybe one day, who knows?
There is no certainty in life and definitely not in crypto. However, with the recent crypto cookie crumbs of Bitcoin dominance dropping below 50% and the progress of ETH 2.0, the gap between the number one and two spots in crypto market capitalization is narrowing for the short term.