I’m well aware there are 100+ answers to this question. I do however believe I can add value to the answers that are already provided.
This answer is based on current market conditions, instiutional money behavior and my overall outlook on the markets over the course of the next few months.
Do I believe this is comparing apples versus oranges? Certainly not, assuming you’re speaking from a ROI (return on investment) perspective.
Current Situation
The questions I answered on Quora the past month provide good background information on what I’m about to share:
- Will Ethereum ever reach $10,000 in price?
- Why are Ethereum gains lagging so much behind Bitcoin during December of 2020?
- Will institutional investors start buying into Bitcoin and altcoins?
That said, I believe my most recent answer provides the best insights in what’s about to happen to the cryptocurrency markets (especially BTC and ETH).
Ethereum (ETH) is currently trading at a price of $1,200, whereas BTC is trading at a price of $41,500.
BTC has surpassed it’s previous ATH (all-time high) by x2, whereas ETH has yet to reach its ATH. The main reason for this is that institutional investors have been buying Bitcoin, whereas not as many institutional money has flown into Ethereum yet.
This is something I expected to happen, as Bitcoin is considered as a store of value, whereas Ethereum is a utility token that’s used within the Ethereum Network. For this reason, I’ve mainly been investing in Bitcoin for the past twelve months. And, I do strongly believe we’ll initially keep seeing institutional money flow into Bitcoin.
Am I currently in ETH or BTC?
However, last week, I made the decision to convert all my BTC to ETH. A big move, that’s well considered. My friend Justin, who’s a great analyst, shared this chart with me (also shown in my previous Quora post):
His current view on ETH shows ETH has the potential to create a huge Head & Shoulders pattern, which could end at 0.086 ETHBTC, a 2x return versus its current ETHBTC ratio.
I anticipated BTC to reach $50,000 by July, except… A week later, Bitcoin is now already trading at $41,000. This doesn’t mean the idea is invalid though.
If exchange’s their BTC outflow continues to be significantly higher than the influx, we could well see $100,000 by July (rather than the anticipated $50,000). There’s barely sell pressure and continuously increasing buy pressure, as I believe this is just the beginning of institutional money coming in.
This means BTC could continue to outperform ETH in the short-term. However, I also believe we’re going to see institutional money enter ETH sooner than later. Which is when the above chart will come into action.
IF this were to happen at a BTC price of $100,000, ETH would be (* 0.086) $8,600 each.
BTC $41,000 -> $100,000 = 143.9%
ETH $1,200 -> $8,600 = 616.6%
I don’t believe this is an unrealistic scenario at all. A combination of increasing interest from retail investors and more institutional investors starting to purchase ETH (once knowledge improves) should lead towards a decrease of Bitcoin dominance and increase of altcoin dominance.
Therefore, at this moment, I believe the risk/reward for Bitcoin versus Ethereum favors Ethereum (ETH).
Helpful? Feel free to upvote this post and follow me for more updates and research reports.
This post is for informative purposes only, I’m not a financial advisor and I currently do have a position in BTC and Altcoins. I have not been paid for this post, this post is out of personal interest.
