Bitcoin and Ether are considered the blue chips of the cryptocurrency world, similar to tech giants Apple and Microsoft, and have cultivated devoted and distinctive communities, resulting in a natural rivalry.
Bitcoin (BTC) and Ether (ETH) are becoming more correlated and are currently moving in sync more than ever before.
However, BTC remains the dominant player, accounting for almost half of the entire crypto market capitalization, with its dominance reaching one-year highs. This is still lower than the 2018-2019 bear market, during which Bitcoin’s dominance peaked at 71%.
ETH, on the other hand, now represents nearly 20%, more than double its value during the previous market downturn. A comparison of returns since April 2018 shows that Bitcoin has outperformed Ether for the majority of the period, with the exception of May 2021.
At that time, Bitcoin had returned about 550% since the first inning of the previous bear market, rising from $7,900 to almost $51,000, while ether had just surpassed Bitcoin by jumping more than 700%.
Ether maintained its lead throughout most of the bull market and beyond. However, due to a declining ETH-to-BTC ratio (down 13.5% over the past year), Bitcoin has made up the ground.
BTC is now on the verge of outpacing ETH over the previous five years, with the former returning 279% compared to the latter’s 289%.
Simple charts like these are affected by time bias, and the five-year returns may appear entirely different in another three months.
Nevertheless, Bob Ras, co-founder of tokenized securities startup Sologenic, stated that the narrative surrounding Bitcoin and Ethereum has shifted somewhat since the 2021 bull run.
Ras informed Blockworks that the Ethereum ecosystem was incredibly robust, thanks to the extensive utility provided by DeFi, NFTs, ENS, and other applications.
“During the bull run, there were a lot more users around who were toying with various digital asset applications, and so it made sense for Ethereum to have been the key driver of growth,” he added.
Bitcoin is having better performance than Ether
The macroeconomic situation has evolved since the 2018 bull market, culminating in the recent US banking crisis.
Ras observed that the Federal Reserve will soon have to shift away from its tightening policy, potentially infusing more liquidity into the market to avoid a credit crunch.
According to Ras, Bitcoin is now competing with gold and other stores of value as a hedge against these probable forthcoming liquidity injections, which will ultimately contribute to the devaluation of the dollar and other fiat currencies.
“BTC is the hardened, reliable asset right now. The narrative could shift again, of course, but it seems likely that the ETH/BTC ratio could trend downwards for some time — perhaps until the next bull market fully kicks in,” Ras added.
Since April 2022, BTC has easily outperformed ETH, with BTC falling by almost 26% while ETH has dropped by 37%, weeks before Terra would depeg, causing chaos for the crypto market.
However, it would be more accurate to say that Bitcoin has performed “less bad,” given that neither has boosted portfolios in the past year.
Looking at all-time returns, Bitcoin outshines Ether by a staggering 4 billion percent since its earliest recorded price in late 2009 ($0.00076392), while Ether has only risen by 66,544% since its launch in 2015, which Ras considers rookie numbers.