As most crypto enthusiasts know, the Ethereum native token Ether, or ETH, is one of the most popular cryptocurrencies on the market. But can Ethereum surpass Bitcoin? Will it ever become the most valuable, or most widely used, digital currency of all? As of August 2022, ETH was the second most commonly traded cryptocurrency after Bitcoin, and also the second most valuable.
The rise of Ethereum
The Ethereum token has experienced tremendous growth in recent years, having increased in price from about £8 in April 2016 to over £1,365 in August 2022. What’s more, crypto experts are predicting that Ethereum could grow in value by as much as 400% during 2022. Coinpedia has suggested that the price of ETH could even rise to close to $13,000 in 2022 if the upcoming transition to Ethereum 2.0 is successful.
Bitcoin vs. Ethereum
When it comes to a straight comparison, however, Ethereum is still a long way behind Bitcoin. As of August 1, 2022, Bitcoin was worth around $23,184, while ETH was only worth around $1,661. However, with both Ethereum and Bitcoin being extremely volatile, there are really no guarantees about where either coin could go in the future.
Is Ethereum a better investment than Bitcoin?
Ethereum is a highly volatile asset, and as such, its value can rise and fall dramatically over a relatively short period of time. This is, of course, the case with Bitcoin and all other cryptocurrencies, which is why the golden rule is to never invest more than you can afford to lose. Investors in both Ethereum and Bitcoin are now pretty confident that the coins are unlikely to suddenly become worthless overnight, but sudden and unpredictable drops in value are not unusual.
Having said that, looking at the annualized rate, the ROI on Ethereum is nearly 300%, which means that early investors in the token have almost quadrupled their investment every year since the summer of 2014. This sounds impressive, but Bitcoin has had an average return of 1,576% and a total return of 18,912%, if you look at its growth from 2010 to 2021.
It is important to note that these numbers, while significant, say very little about what individual investors may have made, or lost, over the years. There are plenty of Bitcoin millionaires out there, and also people who have lost huge amounts of money, in real terms, by investing in Bitcoin at the wrong time. The same is true of Ethereum. Wise (and lucky) investors, however, have made large amounts of money with both coins.
Price predictions for Ethereum
Ethereum is planning on a transition to ‘Ethereum 2.0’, which is a less energy-intensive version that aims to make the coin more sustainable and potentially more appealing, especially when it comes to everyday use. The impact that this will have on actual prices, though, is unclear, and wise crypto experts will always tend to qualify any predictions they make with the caveat that it is simply not possible to accurately predict the price movements of crypto assets such as Ethereum.
Having said that, there are experts who are speculating that the price of Ethereum will hit $4,000 again soon, and that it could potentially rise to over $8,000 or even over $12,000 in the foreseeable future, if the transition to Ethereum 2.0 works out.
What impacts Ethereum price movements?
As most crypto investors are aware, Ethereum is far more than just a crypto token. It was also the first blockchain to use smart contracts, which are essentially coded instructions on the blockchain that can be used to execute financial transactions.
Over time, the Ethereum blockchain has gained many new users, and it has become increasingly expensive to complete transactions on Ethereum. The transition to Ethereum 2.0 is one of a number of responses to this, aiming to improve efficiency through new developments to the Ethereum infrastructure.
At the same time, new Ethereum alternatives with similar capabilities are emerging, and this can also change the demand for ETH in both positive and negative ways. Variables that impact the price of Ethereum include the amount of utilization of the Ethereum network, the cost of transactions, the impact that new upgrades to the ecosystem might have, and, of course, the demand for Ethereum within the crypto marketplace.
What could threaten Ethereum?
The main threat to Ethereum probably comes from the explosion of new altcoins hitting the market every day. Ether may have been one of the first, but now there are literally thousands of digital currencies on the market.
2022 is also set to be the year of ‘Web3’, which essentially refers to an open-access version of the internet built on blockchain technology. This will allow for more transparency in financial transactions, among other things. Ethereum and other blockchains such as Solana and Cardano are working to develop the infrastructure on which the future of Web3 can be built, and it’s fair to say that the competition will be strong.
What is Bitcoin likely to do in the future?
Some commentators have suggested that the price of Bitcoin could reach $100,000 by the end of 2022 and maybe rise as high as $1m by 2030, but as with all these predictions, there really are too many variables in the mix, and long-range forecasts involve a huge amount of speculation.
While crypto was purposely built as an alternative monetary system that operated independently, it has increasingly become tied to the mainstream economy, with a significant price dip in June 2022 largely attributed to factors such as surging inflation worldwide, an unstable stock market and rising interest rates. With the world economy looking shaky as we progress through the year, there’s no telling how much this will be reflected in the price of Bitcoin and other cryptocurrencies.
There are certainly crypto experts, enthusiasts and investors out there who believe that Ethereum could surpass Bitcoin one day, but if you’re looking for a confident forecast as to how and when this will happen, then you’re likely to be disappointed. Even the experts are unwilling to make any solid predictions in a market that remains as volatile now as it always was.