Bitcoin vs Ethereum. As Shakespeare’s classic would say: ‘That is the question’. And, indeed, that is the question if you are a cryptocurrency investor who, taking into account the volatility that characterizes this market, prefers to opt for assets that, due to their track record, provide you with more guarantees.
Differences between Bitcoin vs Ethereum
First of all, and before going into what distinguishes these cryptocurrencies, it is worth noting that they are also united by conditions that, within the framework of the crypto market, make them unique. They both fall into the category of older cryptocurrencies.
Because of their history, they tend to be less exposed to the fluctuations of the newer cryptos. In this sense, we can consider that both of them, in a volatile market, are characterized by representing moderately safe values.
As for the main feature of BTC, we must point out that it is the cryptocurrency that inaugurates the blockchain technology system. For the first time, it implements a platform of computers interconnected in a decentralized way that allows tracking the history of the currencies that are put on the market without being controlled by any Central Bank.
For its part, ETH, in addition to sharing the modus operandi born with the blockchain, has other functionalities that are not part of the possibilities of BTC. We refer to the fact that ETH is not only used for monetary purposes. It can also be employed for uses such as Smart Contracts and Decentralized Applications (Dapps).
Pros and cons of buying BTC
The first thing to keep in mind is that BTC is already an international currency, which provides security against crashes and counterfeits and attracts even institutional investors. But there are more advantages, such as the agility of its transactions and the possibility of checking its real value at any time.
However, there are some disadvantages that you should also be aware of. For example, beware of criminal uses of this cryptocurrency. Also, you cannot afford to expose your digital wallet to hacks, which could be equivalent to wasting thousands of euros. To prevent this, I recommend that you use a cold wallet. Finally, don’t forget that for effective use, you need an exchange that is as reliable as possible.
Pros and cons of buying ETH
On the other hand, the benefits of buying ETH are related to the fact that it is already much more than a cryptocurrency. Therefore, apart from its use in the DeFi and NFT spheres, it has become popular in virtual reality smart contracts. Moreover, the agility of its system has proved to be greater than that of BTC. And we must point out that the community of developers working for ETH is of a high level, which has even attracted institutional investors.
However, you should not invest in this cryptocurrency without first assessing some disadvantages. Among them, we would like to point out that its volatility is higher than that of BTC, which entails the assumption of a higher risk. Even so, it continues to be one of the most popular and secure cryptocurrencies today, since, by market capitalization, it is one of the most outstanding cryptocurrencies today and with a history superior to most.
Bitcoin vs Ethereum: Which is the safer option in the long term?
Within the framework of the so-called cryptowinter that cryptocurrencies are going through in 2022, most analysts agree that the normal thing to happen in 2023 is that both BTC and ETH will continue to fall a little more (to $14,000 in the case of the former), until they stabilize and rise again.
We must contextualize, in this scenario, that the starting price of BTC is around $17,000. In this situation, there are, on the other hand, some reasons that invite us to think that ETH can behave in the long term as a safer option. Let’s take a look at them.
The merger of ETH and its change of protocol suggested a rise in 2022, which, in the end, did not happen. However, these modifications do prepare this cryptocurrency to come out of the cryptowinter in better conditions than BTC.
Let’s keep in mind that it plummeted during 2022 and its price was lowered to $1266.35. The greater safety with respect to BTC is not only based on the fact that it continues to create applications and added value, such as smart contracts, but also that it has withstood the aforementioned crisis better in proportion.
Although the BTC charts look more flattering than those of ETH, you do not have to put aside the expectations of fundamental trading analysis. Of course, if you are really going to invest in Ethereum, don’t forget to store them in a secure Ethereum wallet.
How much to invest approximately?
The decision about the amount to invest in cryptocurrencies, such as BTC vs. Ethereum, depends on factors such as your profile (conservative or more risky), knowledge of the sector, age and budget. If you are a beginner, we recommend that, first of all, you get your accounts in order before devoting a residual part of your funds to these investments.
Once the relevance of these variables has been made explicit, it is time to put a figure on it. And, in this sense, a good part of financial analysts opt for allocating to investment in the less volatile cryptocurrencies, which are the ones we are presenting, between 3 and 10% of the portfolio that you have reserved for diversified risk investments. We are going to explain it to you with a numerical example, which is the best way to understand these things. If you have 60% of your investments in assets considered volatile, consider that a maximum of 6% can be used in the cryptocurrencies mentioned above.
Choosing between Bitcoin vs Ethereum
When choosing between Bitcoin vs. Ethereum, you should keep in mind that the first of these cryptocurrencies has proven to be more attractive for long-term investments, i.e. to buy currencies and hold them, until you decide to sell them. For its part, ETH is more sensitive to price swings, which, for example, can be caused by its higher flexibility and speed in processing transactions.
Broadly speaking, there is one thought you can take into consideration when it comes to deciding which cryptocurrency to choose. When the bull market is strong, ETH performs better than BTC. On the other hand, when the market trend is the reverse, it is the price of BTC that is going to describe a smaller drop.
My personal advice
The key is that, on the one hand, you carefully follow the cryptocurrency pairs and the dollar to decide at what time to enter the market or exit it. On the other hand, combine, as much as possible, technical and fundamental analysis. And, as a last tip, we recommend that you secure your investments by betting on Material BTC and Material ETH, the safest cold wallets today to store Bitcoin and Ethereum.
In short, Bitcoin vs. Ethereum is a dilemma that, in a way, tries to introduce security in the volatile world of cryptocurrencies. Information is the key to making your investments profitable.