BITCOIN TO THE MOON

Is Bitcoin or Ethereum a better investment?

Bitcoin and Ethereum are the two most popular cryptocurrencies, and they have historically set market trends. However, determining which one is a better investment is extremely difficult.

The recent rise in the price of Bitcoin may have bolstered the narrative of digital gold as an effective store of value; however, Ethereum is also aiming to make a significant impact in the market with some serious network upgrades.

Let's take a look to see which one is a better investment.

Bitcoin or Ethereum?

With the release of the much-anticipated Phase-0 of ETH 2.0 on December 1st, Ethereum took a significant step forward in terms of network scalability, speed, and security.

With its migration to the new proof-of-stake system, ETH or Ether's role is no longer limited to that of a store of value asset and transaction fuel; it will also be extensively used for staking to ensure the system's security.The final phase of the upgrade is expected to be completed in 2023 and will mark a significant change in fundamentals, potentially leading to its price moving independently rather than following Bitcoin.

1-yr BTC-ETH Correlation Chart

Coinmetrics is the source.

The correlation between Ethereum and Bitcoin is gradually weakening as we approach the December launch of ETH 2.0. Many cryptocurrency analysts believe the correlation could vanish at any time due to shifting fundamentals.

In addition, Ethereum has not moved higher in comparison to Bitcoin, and it is still trading more than 50% below its all-time high of $1,432.

Bitcoin, on the other hand, is experiencing a surge in value as a result of three factors: increased scarcity, accelerated mainstream adoption, and institutional investors investing in greater quantities.Because it has proven to be an efficient store of value asset, and because of its unique economics, its prices will continue to rise. The popular stock-to-flow price model predicts that the price of Bitcoin will reach $100,000 by December 2021 and $1 million by the end of this decade.

Conclusion

Technically, after the release of ETH 2.0, Ethereum is far superior to Bitcoin because it has an infinite number of use cases and a highly scalable model. As a result, ETH has become the first cryptocurrency to be classified as a capital asset, commodity, and store of value.However, this does not diminish the significance of Bitcoin. Its ability to retain value even during a crisis makes it an ideal hedge against inflation as well as a hedge against the failure of the centralised monetary system.As a result, including both in your portfolio will provide diversification while also lowering portfolio risk.

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The government or monetary authorities grant fiat currencies their power as a means of exchange. The Federal Reserve, for example, backstopped each $1 bill.

Cryptocurrencies, on the other hand, are not backed by any government or corporate entity. As a result, establishing their legal standing in many financial countries throughout the world has proven problematic. The fact that cryptocurrencies have mostly operated outside of the current financial infrastructure doesn't help matters. Cryptocurrencies' legal status has ramifications for their use in regular transactions and trade. The Financial Action Task Force (FATF) suggested in June 2019 that cryptocurrency wire transfers be subject to the requirements of the Travel Rule, which mandates AML compliance. 5

El Salvador was the first country in the world to accept Bitcoin as legal money for monetary transactions as of December 2021. Cryptocurrency regulation in the rest of the world differs by jurisdiction.