As cryptocurrencies continue their meteoric rise, many investors wonder where to place their bets in 2024. Two heavy hitters in the crypto world, Bitcoin (BTC) and Ethereum (ETH) seem poised to grow over the next year. But which horse should you back in this blockchain race?
Bitcoin, the original decentralized digital currency, has name recognition and scarcity built into its DNA. Its capped supply and adoption as “digital gold” suggest Bitcoin could surge higher still as institutional investors continue piling in.
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Yet Ethereum, the popular blockchain for decentralized apps, powers some of crypto’s latest innovations. Upgrades like “The Merge” have set Ethereum up for faster transactions and lower environmental impact, key to greater mainstream embrace. With swaths of DeFi, NFT, and metaverse activity built on Ethereum, its practical usage cases differentiate it from Bitcoin.
As we await the big bang in 2024, let us have a look at the analysis of these two cryptocurrencies, their potential, and why you might choose either in 2024.
Overview of Bitcoin and Ethereum
Bitcoin has been in the spotlight since 2009. Designed by Satoshi Nakamoto as “digital gold” it rewards “miners” for validating transactions on its blockchain. The key value propositions of Bitcoin are its capped supply (only 21 million Bitcoins can ever exist), inflation resistance, censorship resistance, trustless exchange through cryptography, and permissionless access. This establishes Bitcoin as a potential long-term store of value, akin to gold.
As the first cryptocurrency, Bitcoin also enjoys unequalled name recognition and strong network effects that have led to high liquidity and integration. Major financial institutions like Fidelity have offered Bitcoin services as they become more mainstream. Still, Bitcoin has faced critiques around environmental impact, slowing innovation, and limitations for utility beyond just financial transactions.
Ethereum arose in 2015 as a blockchain for decentralized applications that facilitate smart contracts. Created by Vitalik Buterin, Ethereum allows customizable applications like DeFi, NFT marketplaces, metaverse worlds, and more to run via its global computing network.
Upgrades like the 2022 “Merge” have transitioned Ethereum from an energy-intensive proof of work model to a more sustainable proof of stake model.
Ethereum also handles more transactions than any blockchain and settles over $50 billion in value daily. As crypto adoption spreads, Ethereum’s versatility, utility, and ecosystem suggest outsized growth potential.
Come 2024, these two cryptocurrencies will remain viable long-term holds, with Ethereum being favourable for those more keen on technology adoption cycles.
Bitcoin (BTC) Analysis
Before taking a look at the currency trend in the Bitcoin market today, the year 2022 remained a tough year for all cryptocurrencies, Bitcoin and Ethereum included.
At the time, BTC lost approximately 65% of its market value last year. Also, crypto enthusiasts and traders were affected by this market crash caused by a series of events, such as the Terra Luna crash, FTX and other macroeconomic conditions.
The year 2023 has been good for all cryptocurrencies, with Bitcoin rising above an average point of 0.39 in July, thereby trading at $31,000. As of November 2023, BTC was at $36,815, with a market capitalization of $719.29.
Furthermore, the month of December has been favorable for Bitcoin investors, with the cryptocurrency reaching a new all-time high (ATH) in 2023. For the first time this year, Bitcoin (BTC) has surpassed the $44,000 resistance level. At the time of writing, BTC trading at $43,972, the biggest cryptocurrency has witnessed a 4.5% increase in the last 24 hours, contributing to a 14.56% gain over the week.
Some intellectuals believe that Bitcoin is recovering from last year’s damage.
Ethereum (ETH) Analysis
Ethereum started 2021 trading at around $730. By May, after months of increasing adoption and interest for DeFi and NFTs building on Ethereum, ETH hit an all-time high price of $4,891. That translates to a 500% gain within 5 months.
However, concerns around high Ethereum gas fees and scalability issues, plus a broader crypto market crash, then sent ETH plunging 76% back down below $1,000 by July. Ethereum hovered in the $2,000–$3,500 range for the remainder of 2021, unable to regain its former highs. It closed the year at $3,682.
Ethereum kicked off 2022 strong, buoyed by the increasing utility and development happening on its network. Its price shot up 46% in the first two weeks, nearing the $4,000 mark again. However, the euphoria was short-lived as the Federal Reserve’s interest rate hikes and souring macroeconomic conditions triggered a prolonged crypto winter.
ETH bottomed out at $881 in June before recovering to $1,600 mid-summer. The long-awaited Ethereum Merge then successfully transitioned Ethereum to a proof-of-stake consensus in September, boosting ETH by 24% in a month. More recently, FTX’s collapse shook crypto markets, sending ETH below $1,200 to close 2022 around $1,250.
Heading into 2023, Ethereum price forecasts remain largely bullish, between $1,800 and $5,000+. Upcoming upgrades like sharding to further scale Ethereum coincide with steady institutional adoption and DeFi/Web3 innovation.
Similar to Bitcoin, Ethereum also shot up in Q4 2023. However, Ethereum’s upward momentum accelerated after news about NASDAQ’s green signal about Blackrock’s Ethereum ETF came out. Ethereum’s (ETH) price has surpassed the mark of $2,100 for the first time since April. Furthermore, the rally started in Bitcoin and also rewarded Ethereum, which is currently trading at around $2,276.68.
Comparative Analysis
Some differences exist between these two market giants. Bitcoin mining uses a proof-of-work (PoW) model where miners compete with computing power to validate transactions and get rewarded in BTC. This allows the Bitcoin network to remain decentralized but is highly energy-intensive.
Ethereum has shifted from an original PoW consensus to a proof-of-stake (PoS) model after its 2022 merger upgrade. PoS allows ETH holders to validate transactions according to how many coins they hold, enabling greater efficiency and scalability.
In terms of market metrics, As the first cryptocurrency, Bitcoin remains the largest by market capitalization, at over $350 billion as of late 2022. This far outpaces the second largest Ethereum, currently at a $150 billion market cap.
Bitcoin likewise sees higher daily transfer volumes, recently averaging between $15-30 billion daily compared to Ethereum’s $5-15 billion. The liquidity and integrations around Bitcoin also make it less volatile day to day than most altcoins.
However, when comparing growth rates, Ethereum has been outpacing Bitcoin, growing nearly 50% in adoption metrics year-over-year compared to Bitcoin’s 19% in 2022.
Market and Industry Trends
There have been some developments and trends in the cryptocurrency industry, which have promoted increasing adoption as well as regulation of the industry. Some of these developments include:
Bitcoin ETFs
A key recent development is the launch of several Bitcoin exchange-traded funds (ETFs) in 2021 and 2022. ETFs like the ProShares Bitcoin Strategy ETF (BITO) provide mainstream investors with exposure to Bitcoin prices without having to directly hold BTC. This is driving greater institutional investment interest in Bitcoin as an asset class. More Bitcoin ETF approvals are likely on the horizon.
The Ethereum Merge
Ethereum completed its major technical transition from proof-of-work to proof-of-stake consensus in September 2022. This “Merge” sets the stage for greater scalability, security, and sustainability of the Ethereum network. By reducing energy usage by nearly 99%, Ethereum also addresses environmental criticisms while maintaining decentralization. Future upgrades, like sharding, have now become more feasible.
Bitcoin Halving
Bitcoin goes through programmed “halving” events every 4 years, which cut the block rewards issued to miners in half. The next Bitcoin Halving is expected in early 2024. Historically, post-halving has sparked major bull runs since new supply decreases.
If the pattern holds, Bitcoin could ride a renewed speculative frenzy towards breaking its all-time highs. Some analysts forecast hitting $100K+ in 2025-2026 assuming wider adoption continues apace.
Regulatory Development
With crypto becoming more mainstream, crypto regulations are increasing to provide legitimacy, security, and standards. Rules, however, remain fragmented across jurisdictions. Expanding clarity and supportive policy environments, especially around crypto taxation, should further accelerate institutional investment and the mass adoption of digital assets.
Market Adoption of BTC and ETH
Bitcoin is seeing increasing adoption, both for trading and payments. Major global investment banks like Goldman Sachs now provide clients with access to Bitcoin trading. PayPal enables US customers to buy, sell, and pay with Bitcoin. Top companies like Tesla and MicroStrategy even hold Bitcoin on their balance sheets.
El Salvador now recognizes Bitcoin as legal tender alongside the US dollar. Additional smaller nations seem poised to follow. Such moves could increase the use of Bitcoin for remittances, hedge against inflation, and boost financial inclusion.
Meanwhile, Ethereum sees surging adoption for powering decentralized apps spanning DeFi, NFTs, metaverse worlds, and Web3 apps. NFT sales volume on Ethereum recently exceeded $30 billion. Decentralized exchanges running on Ethereum, such as Uniswap and dYdX, also individually facilitate billions worth of swaps daily.
Enterprise Ethereum usage is growing via the Ethereum Enterprise Alliance, which unites over 450 organizations, including JPMorgan, Microsoft, and others building business applications. The Bank of America also recently permitted sharing data over a private Ethereum network.
Risk Assessment
Investing in any cryptocurrency carries elevated risk levels compared to traditional assets. Key risks for both Bitcoin and Ethereum include:
- Regulatory Uncertainty – Governments are still crafting policy stances that could widely swing crypto valuations.
- Volatility – Extreme price fluctuations, sometimes 30-50%+ in short timeframes, make crypto unsuitable for conservative or short-term focused investors.
- Technical Scaling – Can BTC handle faster payments at scale? Can Ethereum resolve congestion and prohibitive transaction fees? Unknown.
- Macro Conditions – Being speculative assets, Bitcoin and Ethereum returns often correlate tightly with overall investor sentiment and appetite for risk-taking across markets.
Ethereum does carry some additional, unique risks presently, including:
- Switch to Proof-of-Stake Consensus Remains Untested – The long-term sustainability of Ethereum’s new consensus mechanism after The Merge remains uncertain.
- Competition among Smart Contract Networks – Several rising networks like Solana, Cardano and Polkadot also offer smart contract and DApp functionalities.
- Complex Transition Management – Ethereum needs to phase out mining completely and carefully integrate sharding to prevent fractures within its broad ecosystem.
Conclusion:
Given current trajectories, Ethereum appears to be the more promising investment choice for 2024. Upgrades to its network stand to unlock greater utility and value storage compared to Bitcoin. And innovations built on Ethereum span far wider segments than just payments, which Bitcoin focuses on almost solely.
However, Bitcoin maintains the crucial properties of trustless, immutable decentralized money – giving it staying power as stores of value become digitized on blockchains. Hence, seasoned investors would likely benefit from some split exposure to both ETH and BTC.
Those who are skeptical about crypto should await signs of consolidation or reduced volatility before committing capital. As regulations evolve to provide guardrails without squashing innovation, the crypto investment thesis will only strengthen over time.
