Can Ethereum Surpass Bitcoin in the Near Future?
In the world of linked assets, when two assets start moving in different directions, it presents a decision point. They may continue diverging or eventually come back together. This relationship can be leveraged to profit from a potential reversion, including using strategies like a long short approach to stay neutral in the market.
While many anticipate a return to historical value ratios between assets, this is not guaranteed. An illustrative example is the comparison between gold and silver. Throughout history, gold has held values significantly higher than silver, ranging from 5 times to as much as 80 times, as seen today.
Despite the nostalgia among some for the days when silver and gold held a 20:1 ratio, it is unlikely to be replicated. Similarly, in the crypto realm, the comparison between bitcoin (BTC) and ether (ETH) is notable. Following the crypto winter, bitcoin has demonstrated stronger performance compared to ether.
In the crypto market, I have chosen to position myself with ether due to its historical tendency to run further and longer than bitcoin has recently, although it has currently underperformed. This underperformance could be attributed to continuous blockchain modifications by ether developers, introducing uncertainty and potentially affecting its value.
On the other hand, bitcoin remains relatively untouched by such interventions, maintaining a strong sense of decentralization. The decentralized nature of bitcoin makes significant amendments to its system challenging, unlike the recent proof of stake structure adopted by Ethereum.
Despite theoretical debates, if bitcoin experiences a significant surge, ether is likely to follow suit and potentially catch up in terms of percentage gains, as observed during the 2021 crypto boom. The introduction of ether ETFs could further boost its price, although the SEC’s stance on crypto ETFs remains cautious.
The key question is not whether ether will catch up with bitcoin, but whether the crypto market will witness another upswing before the current cycle concludes. If such an upswing materializes, ether stands a good chance of outperforming bitcoin in the final stretch.
Cryptocurrency investment is not for the faint-hearted but can serve as a diversification tool and add excitement to a balanced portfolio. For speculative investors seeking action, the crypto market offers a prime arena for potential gains and volatility, promising an eventful journey leading up to the year-end.
Disclaimer: The author holds positions in both bitcoin and ether.
