The crypto industry is beating the stock market this year. Ethereum price has soared by almost 60% year-to-date while Bitcoin is up by about 55%. On the other hand, the S&P 500 and Nasdaq 100 indices have risen by about 10%.
The biggest crypto news of this year was the approval of spot Bitcoin ETFs in January and April’s halving. Most recently, the SEC has approved spot Ethereum ETFs and analysts expect them to start trading in June.
So, which will be a better buy between the iShares Bitcoin ETF (IBIT) and the iShares Ethereum Trust (ETHA)?
Why ETHA will be better than IBIT
There are a few reasons why I believe that the iShares Ethereum Trust will be a better ETF to buy than the Bitcoin Trust, which I have been bullish on in the past.
First, Ethereum has always outperformed Bitcoin. Data shows that the token has soared by over 1,377% in the past five years while Bitcoin has soared by 700% in the same period. The same has happened this year when Bitcoin rose by 55% and Ether surged by almost 60%.
This outperformance is usually because Ether has a lower notional price than Bitcoin, making it more affordable among most traders. Ether was trading at $3,765 while Bitcoin was trading at $68,500.
Second, history shows that the two coins have a close correlation with each other. In most cases, Bitcoin usually sets the tone and the other cryptocurrencies follow. For example, Ethereum surged above $4,000 earlier this year when Bitcoin hit its all-time high of $73,500.
Third, Ethereum has bigger usecases than Bitcoin. Ethereum’s network is used to power platforms across all industries like Decentralized Finance (DeFi), stablecoins, and Non-Fungible Tokens (NFT).
Data by DeFiLlama shows that Ethereum has over $80 billion in stablecoins and a DeFi TVL of over $118 billion. Its networks like Lido, EigenLayer, Aave, and Uniswap are the biggest in the industry. Ethereum is also further ahead of its competitors like Solana, BNB Chain, and Tron. It will also have a strong market share in future blockchain industries.
At the same time, Ethereum makes the most money in the crypto industry. Data by TokenTerminal shows that it has made over $2.77 billion in the past 12 months while Bitcoin made $1.2 billion.
Bitcoin vs Ethereum
The bottom line
To be sure: I still believe that the iShares Bitcoin Trust (IBIT) and other Bitcoin ETFs are important parts of a Sleep Well at Night (SWAN) portfolio.
Besides, Bitcoin has become the gold standard of the crypto industry and has many bullish catalysts. For example, Bitcoin has a supply cap of 21 million coins, and over 19.6 million of them have been mined already.
Bitcoin also has a halving mechanism that reduces the pace of mining every four years. It is also often referred to as digital gold, meaning that central banks could start diversifying into it in the coming years as they move away from the dollar.
Also, as I have written before, the supply of Bitcoin in exchanges has plummeted as many institutional investors buy. Indeed, Bitcoin ETFs have been the fastest-growing funds since they were launched in January.
Bitcoin has also had a stellar performance since its launch in 2009. In this period, it has soared from less than $1 to over $68,000, beating popular assets like stocks and gold.
Most importantly, Bitcoin has always bounced back from its deep meltdowns. Recently, it jumped from the 2022 low of $15,000 to a record high of $73,500. This means that it will likely jump to above $100k in the near term. If this happens, however, history suggests that Ethereum will be doing much better, making it a better investment.
