Over the last year, the cryptocurrency industry has attracted a lot of attention and has seen impressive growth despite such an uncertain economic time. These decentralized currencies have been a saving grace to many investors but for those unfamiliar with how the crypto market operates, it can be daunting and overwhelming to understand.
Bitcoin is the most popular cryptocurrency in the market that is based on blockchain, with a total market value of around $240 billion, Ethereum also utilizes open-source blockchain technology and is the second biggest digital asset in the crypto market.
NTF’s which run on the Ethereum network has attracted recent attention but is an asset that is still new to the game. NTF’s are a risky investment as it deals with the selling of creative ownership while original creators retain copyright and reproduction rights. Right now, it’s hard to tell how NTF will grow over time but as the market is expanding investors are become more aware of what an NTF is and how to incorporate them into their crypto portfolios.
Analyst at The Motley Fool Bernd Schmid, explains that Ethereum is more like a platform that creates a code on the blockchain and acts more as a facilitator for decentralized automated transfers, so exchanges are running based on the code on the Ethereum blockchain. This positions Ethereum as an asset that builds lending contracts.
Schmidt says “you could theoretically do the same thing with Bitcoin”, these transfers could be delivered with Bitcoin but for now the Bitcoin community wants to keep things on a basic level and not add any functionality. Recently, Bitcoin is mainly used for buying, storing, and facilitating transfers but not much more can be done with it.
A year ago, Bitcoin was valued at about $10,000 a piece and as of last week has grown to $63,000, Ethereum has grown from $150 to $2,400 within the same time frame which has investors questioning which cryptocurrency would be more beneficial to their portfolios in the long run.
In an interview with TheStreet, Steve Ehrlich, CEO and co-founder of crypto-asset broker Voyager Digital, mentioned that “the upside on Ethereum over the next 12 months is greater than the upside on bitcoin because of the price and where it can go…in the crypto world, there is a propensity to look at lower dollar coins as the increase can be much greater in a shorter period of time.”
Ehrlich also noted that all Voyager Digital customers own both Bitcoin and Ether, but “have shifted their cryptocurrency allocations in the past four months to enlarge their Ether holdings.” Voyager’s customers were holding about five to six times more bitcoin than Ether but since the start of the year, “that ratio has dropped to about four times.”
Ryan Watkins, a senior research analyst at crypto research firm Messari, expects “Ethereum to reach between $5,000 to $10,000 per coin by the end of the year.” In comparison, he expects Bitcoin to rise as high as 2.4 times its recent level which would raise the cryptocurrency’s value to between $10,000 to $150,000 by 2022.
eToro Analyst Simon Peters reported to Crypto AM that “Ethereum could certainly challenge Bitcoin for the number one spot against crypto-assets, in terms of market cap, but it will be a few years yet before this could potentially happen.”
Ethereum has a higher risk profile with a more volatile market performance than Bitcoin which is why Ether is more attractive to bulls, but Watkins and Ehrlich say that “when it comes to valuing bitcoin, Ethereum and other cryptocurrencies, it’s best to avoid comparing them against each other because bitcoin and Ethereum have different use cases.”
As countries face ongoing economic stress and global currencies continue to lose value due to the pandemic, the crypto market is becoming more appealing to investors as they hedge against inflation. Many are becoming reliant on cryptocurrencies such as Bitcoin and Ethereum as the innovative use of blockchain technology provides a new market for possible investments.
By Surina Nath