Bitcoin or Ethereum Longterm: Which Is Better?

Published: 9th July, 2024 | Last Updated: 1st July, 2024

Markos Koemtzopoulos

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

In a recent report, VanEck predicts that the price of Ethereum will reach $22,000 by 2030. In a bullish scenario, they see this number as high as $132,000. The price of Bitcoin, on the other hand, is predicted to grow to anywhere between $70,000 and $100,000 in 2024, depending on who you ask. Jack Mallers, the founder of Strike, believes Bitcoin will reach $1Mn in 2025, while Michael Saylor, the CEO of MicroStrategy, is convinced that Bitcoin will reach $10Mn over the next ten years. So which is better for the long term? Bitcoin or Ethereum? In this post, I will help you decide. 

What is Bitcoin?

Bitcoin

Bitcoin is the largest coin by market capitalization and was launched in 2009 by a person or group called Satoshi Nakamoto.

What’s unique about Bitcoin is that it has a limited supply of 21 million Bitcoins and that there is no intermediary, such as a central bank or government, that can control it.

Bitcoin is often seen as the ultimate store of value that is similar to but better than gold.

It has a finite supply, is easier to send, is more straightforward to use, and is equally durable.

It uses a Proof of Work consensus mechanism that guzzles a lot of electricity and has the largest network of computers participating in validating transactions.

People participate in this validation process to have a chance at adding new blocks for which they are rewarded in transaction fees and new Bitcoin. 

Bitcoin Competitors

In the early days of crypto, many competitors to Bitcoin emerged. Bitcoin Cash, Bitcoin SV, and Litecoin all aim to create a decentralized digital currency that can process transactions faster than Bitcoin.

However, none of them has been able to challenge Bitcoin’s position as a leader. 

What Does the Future Hold for Bitcoin?

Bitcoin is here to stay.

A highly decentralized network of computers (nodes) participates in the Bitcoin blockchain, and no single government can stop it.

For example, when China clamped down on Bitcoin mining facilities, miners moved their activity to countries with more crypto-friendly regulations.

In the US, the regulation of digital assets is already a hot electoral topic, as more than 50 million Americans own crypto. 

This thing isn’t going away.

How Valuable Is Bitcoin Going to Be? 

Bitcoin has been growing parabolically since its inception.

According to Raoul Pal of Real Vision, Bitcoin has delivered annual returns of more than 150% over the past few years.

btc 4 year CAGR
BTC 4-year CAGR ( in orange) according to Glassnode

What is Bitcoin replaces gold

If Bitcoin replaces gold as a store of value, it implies a price of $700,000.

Gold bugs are an older generation, and as baby boomer wealth gets passed on to younger generations, they are likely to rotate their assets into Bitcoin.

bitcoin vs gold
The analysis from Woobull shows just how much more profitable it has been to invest in Bitcoin compared to gold.

The impact of Bitcoin ETFs

The approval of spot Bitcoin ETFs by the Securities Exchange Commission in the United States in January 2024 only helped to solidify Bitcoin’s position as digital gold.

The introduction of ETFs makes it easier for institutional investors to buy Bitcoin. However, the average purchase value of the Bitcoin ETFs is low, indicating that inflows are mostly driven by retail investors. 

Bitcoin price predictions by authority figures within the crypto space

Arthur Hayes is the former CEO of BitMEX and a respected expert on crypto markets. He expects that crypto will stabilize at $60-70K in 2024 only to reach new heights in 2025

Here are some more predictions from Wall Street and the crypto world:

Wall Street 

  • VanEck: $70,000
  • Standard Chartered: $100,000
  • Fidelity: $100,000
  • Franklin: $150,000
  • Ark Invest: $150,000
  • Bitwise: $80,000
  • Bernstein: $150,000

Crypto

  • Messari: $60,000
  • Bit Mining: $75,000
  • CoinShares: $80,000
  • Hashed: $100,000
  • Matrixport: $125,000 

At ElementalCrypto, we believe that Bitcoin will continue to be the largest cryptocurrency by market cap in the years to come.

This implies that Ethereum, starting from a lower market cap, has more room to grow.

Let’s take a closer look at Ethereum.

What Is Ethereum?

Ethereum

Ethereum is the second-largest cryptocurrency after Bitcoin.

At the time of writing, Bitcoin is worth $1.3 trillion, while Ethereum is worth $400 billion.

The Ethereum network was conjured up by a 17-year-old Canadian kid called Vitalik Buterin in 2013.

Vitalik was doing a bachelor’s degree in cryptography when he came across Bitcoin.

He wanted to create a more general-purpose platform.

What’s unique about the Ethereum blockchain is that it allows the use of smart contracts. This means that:

  1. Developers can build apps on top of the Ethereum. 
  2. Anyone can issue their own tokens. These can be fungible tokens or non-fungible tokens.

The fact that you can build apps on top of Ethereum has spawned the creation of a whole industry known as decentralized finance.

These are protocols that offer various financial products and innovations, such as 

  • Decentralized exchanges like Uniswap
  • Lending apps such as Compound and Aave
  • Stablecoin protocols such as Maker and DAI stablecoin
  • Yield optimization protocols such as Yearn Finance

All of these operate without a central authority to control them. 

To use these apps and transact on the Ethereum blockchain, you need ETH. 

Ethereum Competitors

There are many competitors to Ethereum, such as Solana, Polkadot, and Cardano; however, Ethereum accounts for 60% of the total value locked on decentralized applications (dApps). 

What Does the Future Hold for Ethereum?

The biggest concern amongst speculators is whether Ethereum will be able to outperform competing smart contract platforms with superior features.

While the newer blockchains might offer faster transactions and lower transaction fees, Ethereum has a first-mover advantage.

Ethereum was the first to appear on the market and, as such, has built strong network effects.

Most developers now know how to program in Solidity, Ethereum’s programming language.

It’s a hassle for them to switch to a new programming language.

Also, dApps are interoperable with each other. Think of this like Lego bricks. You can connect two apps to make something new.

However, you can’t do this if you have a Lego brick and a Playmobil.

The two are not compatible. 

The question is: Is Ethereum MySpace, or is it Facebook?

If it’s MySpace, then a superior platform such as Facebook might come along and smash it into irrelevance.

However, if Ethereum is Facebook, then no matter who comes along to challenge it, even if it’s Google with its snappier Google+, they don’t stand a chance.

I believe Ethereum has been around long enough to prove that it’s the Facebook of our times. 

How Valuable Is Ethereum Going to Be? 

In May 2024, the SEC approved the launch of a spot Ethereum ETF.

ETH’s price immediately increased by $100bn, adding more market cap in one day than the entire market cap of Solana.

At the time of writing, the ETH ETFs have yet to appear on the market. 

How Layer 2s drive scale

While Ethereum itself is slow and transaction fees can be expensive, many layer two solutions are thriving.

A layer two batches transactions before it validates them on the Ethereum blockchain, which results in much faster processing speeds and lower fees. Think cents vs. tens of dollars for transactions. 

Ethereum Price Predictions

VanEck predicts ETH will reach $154,000 in a bull case, $22,000 in a base case, and $340 in a bear case. 

“Ethereum is a successful digital economy that attracts –~20M monthly active users while settling $4T in settlement value and facilitating $5.5T in stablecoin transfers over the last twelve months. Ethereum secures over $91.2B in stablecoins, $6.7B in tokenized off-chain assets, and $308B in digital assets.”

Bitcoin Vs. Ethereum Historical Performance

Bitcoin Vs. Ethereum

Assuming you had invested $1,000 in January 2020 in Bitcoin, your investment would now be worth 7,650.

If you had invested in Ethereum instead, you would now have $20,320.

The Morningstar chart below shows just how Ethereum has outperformed Bitcoin as an investment. 

Source: Morningstar via VanEck.

In January 2020, Bitcoin was trading at $8,000. It reached an all-time high of $68,000in the 2021 bull run, and more recently, it peaked at $71,000 in the 2024 bull run.

On the other hand, Ethereum was trading at $169 in January 2020. It reached an all-time high of $4,630 in 2021 during the Dencun upgrade.

In the short run, I believe its ETH price will reach $4,500. 

Estimated Impact of ETH ETF

Google Trends shows that interest in the ETH ETF is 20% of that of the BTC ETF.

According to the graph, interest in the BTC ETF started in October 2023.

From October until the January launch, market incumbents pumped the price of $BTC by $291 Bn in market cap.

ETH’s pump only lasted about a week because no one expected it until the last moment. A naive analysis implies ETH should have grown 20%*291 Bn=$58.

Indeed, once rumors started spreading about the ETH ETF, ETH’s market cap grew by $65Bn.

Very close to the estimate.

So what happened when retail started buying the BTC ETF through their brokerages after the launch?

Bitcoin’s market cap grew by $615Bn over the next three months. This implies 20%* $615Bn=$123Bn will be added to #ETH‘s market cap once the ETH ETFs launch.

Hence, the ETH market cap will go from $552 Bn to $429 Bn today. This implies a peak price of $4,514 in the next three months after launch.

Key Differences Between Bitcoin and Ethereum

Key differences between Ethereum and Bitcoin

Feature Bitcoin Ethereum
Launch Date January 3, 2009 July 30, 2015
Creator Satoshi Nakamoto Vitalik Buterin
Primary Purpose Digital currency (store of value, payment) Decentralized applications (dApps) platform
Consensus Mechanism Proof of Work (PoW) Proof of Stake (PoS) (Ethereum 2.0 upgrade)
Supply Limit 21 million BTC No fixed supply limit
Block Time ~10 minutes ~12-14 seconds
Smart Contracts No Yes
Programming Language C++ Solidity
Blockchain Single-purpose Multi-purpose
Use Cases Currency, store of value Smart contracts, dApps, DeFi, NFTs
Transaction Speed 7 transactions per second (approx.) 30 transactions per second (approx.)
Transaction Cost Varies, generally lower than Ethereum Varies, generally higher than Bitcoin
Network Upgrades Less frequent Frequent (e.g., Ethereum 2.0)
Flexibility Limited High (supports various types of dApps)
Token Standard BRC-20/ordinals, Runes ERC-20, ERC-721, etc.
Community and Ecosystem Primarily financial and payment-focused Broad, including DeFi, NFTs, gaming, etc.

How to Decide Between Bitcoin and Ethereum

1. Growth 

Since Ethereum is growing from a smaller market cap, it stands to reason that you could see your portfolio multiple times by a larger factor compared to holding Bitcoin.

Conversely, ETH’s price is more volatile, and Ethereum is less established than Bitcoin is. For example, retail interest in the ETH ETFs was 20% of that of the BTC ETFs. 

Here are simulations of what $10,000 invested into ETH and BTC might look like as both a short-term  and long-term investment

ETH vs BTC ROI

Price ETH BTC Value of $10,000 invested in ETH today Value of $10,000 invested in BTC today
today $3,400 $57,000 $10,000 $10,000
2024 plausible $4,500 $70,000 $13,235 $12,281
2025 plausible $8,000 $120,000 $23,529 $21,053
2030 plausible $22,000 $300,000 $64,706 $52,632
extreme bull case $154,000 $10,000,000 $452,941 $1,754,386

2. Energy consumption

Many investors are concerned about Bitcoin’s environmental impact and energy usage.

Why bitcoin consumes so much energy

Miners compete in complex mathematical puzzles, and those who win can add a new block of transactions for which they are rewarded in fees and new BTC.

But solving the puzzles requires a lot of electricity, equal to the annual consumption of a small country. Note that 50% of the energy comes from renewable energy sources. 

Ethereum energy consumption

Ethereum used to operate on a consensus mechanism similar to Bitcoin, and it consumed a large amount of energy.

However, in 2022, Ethereum transitioned to a Proof of Stake consensus mechanism.

In PoS, validators are chosen to create new blocks and confirm transactions based on the amount of cryptocurrency they hold and are willing to “stake” as collateral.

This eliminates the need for energy-intensive mining operations. Estimates suggest that Ethereum’s energy usage dropped by over 99% following the transition.

3. Diversify

In all fairness, no one knows what the future holds in store.

A more balanced approach would be to invest 60-70% of your assets in the more established one, which is Bitcoin, and an additional 30% in Ethereum. 

4. Expansion

Both Ethereum and Bitcoin are likely to expand as platforms in the future.

While all the DeFi activity is taking place on Ethereum today, Bitcoin’s Taproot upgrade means that developers can now start building apps on top of Bitcoin.

This economy is still in its infancy but is rolling out fast.

Bitcoin can play a crucial role as it is considered the most secure and most decentralized blockchain. 

5. Supply

Bitcoin’s hard cap of 21 million implies that prices will continue to increase as market demand grows.

On the other hand, while Ethereum is inflationary, it entices users to lock up their ETH for staking rewards, which removes availability from the market.

6. Yield

Because Ethereum is a Proof of Stake blockchain, you can delegate your ETH to a validator and stake them.

The current APY on staking ETH is 3.4%.

So yes, ETH inflates at 0.4% annually, but you earn eight times more than that by staking your assets.

Moreover, if you stake your assets with a liquid staking platform such as Lido, you can use those assets elsewhere, such as to take out a loan.

Bitcoin does not offer investors a native yield. You cannot stake Bitcoin.

However, you can lend it to the multitude of apps that are available to earn a return. 

The Bullish Case for Bitcoin

Economies worldwide are expected to loosen their monetary policy as inflation is tamed.

This means lower interest rates and more money printing, which creates a risk to appetite in financial markets.

We see a high correlation between low interest rate environments and appetite to invest in crypto.

As such, most pundits expect Bitcoin to grow by 2025.

The launch of Bitcoin ETFs worldwide will only help solidify Bitcoin’s position. The US elections are also expected to boost the markets. 

Bitcoin is ultra-sound money and equivalent to digital gold. But apart from that, it is at the very early stages of developing its own defi ecosystem. 

The Bullish Case for Ethereum

There are over 4,500 apps built on top of Ethereum: Gaming, Real World Asset tokenization such as real estate, NFT marketplaces, and many financial applications.

If Bitcoin were to reach $100,000, then assuming the same historical EHT/BTC exchange rate, we could see ETH go as high as $14K, making ETH the asset with the higher return on investment. 

How to Buy Bitcoin and Ethereum

Bitcoin and Ethereum

There are two ways you can buy BTC and ETH. 

1. The first is to open an account at a crypto exchange.

Choose a large, well-known platform such as Kraken, Coinbase, or Crypto.com.

Once you verify your identity, you will deposit cash from your bank account and purchase ETH and BTC at the market price.

If you are unsure of whether it’s a good price to enter the market, you should not make your purchase all at once.

Instead, you should spread out your purchases over weeks and months. This is known as dollar cost averaging.

For maximum, you are better off storing your crypto in a hardware wallet than on the exchange. This way, if the exchange goes insolvent, you still own your Bitcoin and ether. 

2. Online brokers

The other alternative is to use your online brokerage to buy a Bitcoin ETF or an Ethereum ETF when it is released over the coming weeks.

The benefit of doing it this way is that you don’t need to switch to another platform if you already use a brokerage, and you don’t need to worry about where to store your crypto. 

Markos Koemtzopoulos is the founder and main writer of ElementalCrypto. He has been a lecturer at the University of Nicosia on cryptocurrencies and DeFi and has taught two courses on crypto and blockchain technology.

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