In precious metals, gold is the leader, with many market participants considering silver, gold’s sidekick. In crypto, Bitcoin is golden, while Ethereum takes the silver medal. While silver prices tend to be more volatile than gold, Bitcoin’s historical volatility is slightly higher than Ethereum’s. Meanwhile, the two cryptos are on a bullish path in March 2024, and the potential for a continuation of the explosive price action is high.
In an October 18, 2023 Barchart article, I wrote:
Cryptos remain in a coma compared to past years because the bullish and bearish factors pull them in opposite directions. The longer the battle continues, the more likely a dramatic move will occur that either takes the values far higher or pushes them into a bearish abyss.
Bitcoin was at the $28,212.32 level, with Ethereum at $1,572.423 on October 18. At $72,885 and $3,985, respectively, on March 13, Bitcoin and Ethereum were 158.3% and 153.4% higher.
Bitcoin reaches a new record peak
On March 5, 2024, Bitcoin prices rose above the November 2021 high.
The chart highlights Bitcoin’s rise to $73,632.34, eclipsing the November 2021 $68,906.48 previous record peak.
At over the $72,800 per token level, Bitcoin’s market cap was over $1.428 trillion, with a $2.73 trillion value of the total asset class. Bitcoin rallied 375% from the November 2022 low at the most recent high.
Ethereum has a way to go to eclipse the late 2021 high
Ethereum, the second leading crypto, followed Bitcoin higher.
The chart illustrates Ethereum’s rise to $4,090.306 on March 12, the highest level since December 2021.
After At just under the $4,000 per token level, Ethereum’s market cap was over $475 trillion, more than four and a half times higher than the third-leading crypto, Tether. Ethereum rallied 363% from the June 2022 low at the most recent high.
While Ethereum kept pace with Bitcoin on a percentage basis, the price remains below the record $4,865.426 November 2021 high.
Bitcoin’s historical volatility is higher
Bitcoin traded as low as 10 cents per token in 2010, while Ethereum’s low was $6.07 in December 2016. The boom-and-bust price action makes historical volatility much higher than in most other asset classes, but Bitcoin’s historical price variance measure remains higher than Ethereum’s.
The long-term chart highlights Bitcoin’s 44.39% historical volatility reading in early March 2024.
Ethereum’s price variance is slightly lower at the 39.66% level.
If historical volatility trends hold, we should expect more extreme price action in Bitcoin than Ethereum over the coming weeks and months. However, Bitcoin’s rise to a record high could cause investors and speculators to flock to the second-leading cryptocurrency as it offers relative value in the runaway bull market conditions.
The difference between Bitcoin and Ethereum
While Bitcoin and Ethereum are cryptocurrencies, they have significant differences:
- Bitcoin’s creation focused on an alternative to traditional money, aiming to be a decentralized and digital cash system.
- Ethereum is an open-source platform for creating and implementing smart contracts and decentralized applications (DApps).
- While the Bitcoin ledgers verify and record transactions, Ethereum’s blockchain also hosts DApps and smart contracts that can interact directly without an intermediary.
- While Bitcoin and Ethereum started with a Proof-of-Work (PoW) consensus mechanism, Bitcoin continues to use PoW, while the Ethereum 2.0 upgrade shifted to a Proof-of-Stake (PoS) mechanism. PoW is more energy intensive, while PoS is more energy efficient. PoW rewards miners for solving complex mathematical problems to validate transactions and add them to the blockchain. PoS creates new blocks based on the amount of cryptocurrency holdings staked as collateral.
- PoW is less scalable than the PoS consensus mechanism.
- Bitcoin has a capped supply of 21 million tokens. Ethereum has no maximum supply limitations.
- Ethereum tends to be faster than Bitcoin.
Bitcoin.com lists the key differences between the two leading cryptocurrencies in the following table:
Meanwhile, with over 300% rallies from the most recent lows, Bitcoin and Ethereum remain bullish beasts.
The power of spot crypto ETF products- Is Ethereum next?
Bitcoin’s recent rally to a new all-time high came on the heels of the SEC’s qualified approval of spot Bitcoin ETF products that expanded the leading crypto’s addressable market. Spot Bitcoin ETFs allow market participants to own Bitcoin exposure in standard equity accounts, avoiding computer wallets and crypto exchanges.
On March 4, the SEC further delayed its decision on BlackRock’s spot Ethereum ETF product. If the price action in Bitcoin since the early January ETF approval is a guide, new highs in Ethereum could be on the horizon when the SEC finally approves the spot Ethereum ETF.
Any marketing expert knows that expanding a product’s addressable market is the road to success. A spot ETF in Ethereum would likely cause a herd of buyers that could challenge and eclipse the November 2021 $4,865.426 high, which is the upside target. Meanwhile, if Bitcoin is heading for the $100,000 level, expect higher Ethereum prices as the second-leading cryptocurrency offers price and utility value.
Cryptos are on fire in March 2024, but the odds of government intervention could increase with the prices and the asset class’s market cap. Expect legislators and regulators to sound alarm bells over the potential for systemic financial risks as the market cap moves higher over the coming weeks and months.
On the date of publication, Andrew Hecht did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
