As Bitcoin halving approaches, interest in the world of cryptocurrencies is growing. Could Ethereum be a better choice than BTC to capitalize on this trend?
The 2024 Bitcoin halving is imminent, with less than 60 days until the event. The Fear & Greed index remains in a high range, with a score above 70, while the Stock to Flow indicator has taken on a blue color.
At the center of the debate is the contrast between Bitcoin and Ethereum. The prevailing question is: which of the two projects deserves more attention ahead of the halving?
Ethereum or Bitcoin?
Since the halving is a Bitcoin-specific event, the choice seems to automatically lean towards BTC. However, the answer may not be so obvious, especially by analyzing the historical price performance of the two projects in previous halving periods and considering the implications of Ethereum’s latest update, which occurred between 2021 and 2022.
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Bitcoin and the 2024 halving: what are the expectations?
It is not certain that BTC will increase in value with the 2024 halving; no astral or divine principle can guarantee the repetition of historical cycles. Despite this, confidence in Bitcoin remains high, and the halving of BTC supply leads many to logically believe that we can expect an appreciation in the value of Bitcoin, while it is less likely to immediately see disproportionate growth from competing projects like Ethereum, which could only benefit from the "hype" effect generated by the Bitcoin halving. It is important to note that, with each successive halving, BTC’s performance has progressively reduced, a phenomenon considered normal with the increase in market capitalization.
- ETH/USD weekly graph
- Source: Teletrader.com
Ethereum: a better choice than Bitcoin?
While Ethereum may not be our primary focus, it is still important to consider it. Ethereum, having a lower market capitalization and being more recent than Bitcoin, tends to record, in moments of market euphoria, proportionately greater appreciations than Bitcoin (as well as greater losses). Therefore, for those who believe the halving could generate a new uptrend, it is useful to know that Ethereum has historically outperformed BTC.
Additionally, the Ethereum update, known as "The Merge", introduced a mechanism that significantly reduces the issuance of new ETH by switching from Proof of Work (PoW) to Proof of Stake (PoS). Unlike PoW, which rewards miners with new ETH for each block mined, PoS rewards validators for their participation in validating blocks, reducing annual ETH issuance and potentially putting deflationary pressure on the offer. Before The Merge, the Ethereum Improvement Proposal 1559 (EIP-1559) introduced a mechanism to burn a portion of transaction fees, further impacting supply.
- ETH/USD weekly graph
- Source: Teletrader.com
In essence, even Ethereum, silently, is in its way facing a sharp contraction in the supply of tokens.
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Original article published on Money.it Italy 2024-02-26 18:02:46. Original title: Perché puntare su Ethereum in vista dell’halving di Bitcoin?
