Bitcoin (BTC) vs. Ethereum (ETH): Which Will Win Q3 2024?

This text compares Ethereum and Bitcoin based on several factors, including usage statistics, institutional adoption, regulatory approval, upgrades, meme coins, and competitive analysis. According to the text, Ethereum has an advantage in terms of dApp usage, with popular decentralized apps like MetaMask, Oasis App, MakerDAO, and Uniswap seeing significant growth. Ethereum also has a planned upgrade, Pectra, which is expected to be bullish for ETH price.

As of mid-June, Bitcoin and Ethereum, the two largest cryptocurrencies in terms of market capitalization, daily transaction volume, and exchange trading volume, have delivered nearly identical returns since the beginning of the year.

The S&P 500 Index saw a remarkable gain of almost 15% during that timeframe. This is significantly higher than the typical annual increase for this broad stock market measure.

During the exceptional two quarters for U.S. stocks, Bitcoin and Ethereum yielded returns four times greater than those investments. In simpler terms, Bitcoin surpassed the expectations from the government’s investment guidance yet again.

Since the beginning of this year, the average annual return on investment for Bitcoin and Ethereum has been exceptional, with both cryptocurrencies poised for a remarkable gain of approximately 116%.

The rate of return is exceptionally high, surpassing the maximum limit set by the compound interest calculator tool on Investor.gov, which only permits input of interest rates up to 100%.

Did you know that if you contribute $100 each month for 15 years with an assumed interest rate of 15% (higher than the average for the S&P 500) and compounded daily, your total investment would amount to $68,815? This includes a grand total of $18,100 in contributions you made along the way.

As a crypto investor, if I were to calculate my returns using Bitcoin or Ethereum profits and input an interest rate of 99%, the outcome would be significantly larger than what you’d typically expect. It might even seem unrealistic, approaching numbers in the trillions.

Which cryptocurrency is expected to surpass the other significantly in terms of profit generation for investors during the third quarter, or will Bitcoin and Ethereum once more nearly equal each other’s profits for crypto investors in the second half of the year?

Six significant aspects are worth taking into account when evaluating the outlook for Bitcoin and Ethereum. While certain factors may favor Bitcoin over Ethereum, others may lean more towards Ethereum, and some may have an equal impact on both cryptocurrencies.

1. Fed Dollar Inflation (Advantage Bitcoin)

As a financial analyst, I would assert that the U.S. federal funds rate holds significant importance as the focal point of the worldwide financial system. This rate signifies the expense incurred by Federal Reserve banks when they obtain short-term borrowing from the ultimate economic lender – the Federal Open Market Committee (FOMC) – within the U.S. monetary system.

As a researcher studying the monetary policy of the Federal Reserve, I can explain that the Fed’s interest rate sets the benchmark for borrowing costs throughout the financial system, reaching as far as store credit cards and payday lenders. Consequently, when the Fed adjusts its rate, the entire financial economy follows suit, experiencing a ripple effect of upward or downward pressure on interest rates.

When the market is rising, a strong headwind can significantly decrease the value of stocks and cryptocurrencies. Conversely, when the market is falling, a powerful tailwind can boost the prices of various investment products.

Based on current predictions, it seems likely that the U.S. dollar will experience one rate cut by the end of this year. Philadelphia Federal Reserve President Patrick Harker expressed his belief in this possibility during a speech on Monday. Following the Federal Open Market Committee’s decision to keep rates unchanged at their seventh consecutive meeting last Wednesday, Investopedia reported that such an adjustment could occur before the year is over.

Over the past week, unexpectedly low inflation figures have sparked optimism among many that the Federal Reserve will reduce interest rates. However, Federal Reserve officials are proceeding with caution regarding this matter.
“The Federal Reserve, under the leadership of Chairman Jerome Powell, has reported satisfactory advancements in inflation control. Our economy is experiencing robust growth and a thriving labor market. However, our belief is that interest rates will eventually need to be reduced to sustain this progress. At present, such reductions have not been necessary.”

In the meantime, the economies of certain central banks, including the Bank of England and the Bank of Korea, are expressing growing uneasiness about reducing interest rates.

When the Federal Reserve eventually decides to lower interest rates once more, it could provide a boost for cryptocurrencies, particularly Bitcoin. This is due to Bitcoin’s deflationary nature and limited supply – only 21 million BTC tokens will ever be produced through its blockchain system.

2. DeFi and DApps (Advantage Ethereum)

Bitcoin can be seen as akin to digital gold – a scarce and valuable asset in the digital realm where abundance is the norm. Conversely, Ethereum resembles the thriving automotive economy of the 20th Century that emerged from the Industrial Revolution. Bitcoin represents scarcity in the cybernetic universe.

As a crypto investor, I’ve come to realize that a world devoid of scarcity may be lacking in some valuable aspects. On the other hand, Ethereum serves as an essential tool for bridging various sectors of the economy and enabling them to participate in intelligent financial markets through smart contracts.

In the year 2024, the usage statistics for MetaMask, Oasis App, MakerDAO, and Uniswap remain impressive. Notably, MetaMask reported a significant increase in users – a 55% jump from 19 million to an astounding 30 million within just four months (February).

MetaMask installations have nearly reached the record-breaking level seen in 2022, with an impressive user base of around 30 million people. These individuals collectively manage approximately 100 million accounts through MetaMask, the Ethereum wallet provider.

The Oasis App is a decentralized application (dApp) operating on the Ethereum network. As of Thursday, the app’s market value, as recorded by BitDegree, stood at approximately $1.77 billion. In the past 30 days, the dApp facilitated around 308,620 transactions – marking a significant jump of 100% compared to the previous month.

MakerDAO on Ethereum is a significant and sophisticated DeFi application bringing Ethereum’s vision to life. The app’s native currency, DAI, functions as a mini economy with a market value this week surpassing $5.4 billion.

Currently, Uniswap outshines other decentralized crypto exchanges (DEXs). With fees reaching nearly $100 million in total over the past month, it holds a commanding position in this sector.

In the previous month, only the following Web3 applications managed to earn significant fee revenues: Bitcoin, Ethereum, Tron, and Lido.

3. Institutional Adoption (Advantage Bitcoin)

As an analyst, I’d put it this way: In my analysis, the rapid growth of the Bitcoin exchange-traded fund (ETF) was highlighted by BlackRock CEO Larry Fink in March as a record-breaking achievement for ETFs.

BlackRock CEO Larry Fink says the $IBIT Spot #Bitcoin #ETF is the fastest growing ETF in history
— Simon Dixon (@SimonDixonTwitt) March 27, 2024

In contrast to other cryptocurrencies, Bitcoin and Ethereum hold an edge when it comes to regulatory approval. However, Bitcoin maintains a more significant advantage over Ethereum as we approach Q3 2024. Daily transactions worth hundreds of millions of dollars occur in Bitcoin ETFs regulated by the US government.

Previously dismissive of cryptocurrencies like Bitcoin during the 2020 presidential race, former U.S. President Donald Trump now feels bold enough to advocate for their use among voters on the campaign trail.

This represents a significant indication of growing acceptance and integration of Bitcoin and Ethereum into established financial institutions and mainstream markets. Recently, former President Trump expressed his support for mining Bitcoin exclusively within the US borders, believing it could contribute to America’s dominance in artificial intelligence technology.

As a researcher, I’d put it this way: I came across an exciting development on Thursday when I learned that VanEck intends to introduce the inaugural Bitcoin exchange-traded fund (ETF) Down Under, in Australia.

4. Prague Electra (Pectra) Update: (Advantage Ethereum)

The Dencun Update represented a significant advancement for Ethereum, leading to a substantial increase in Ether’s worth on cryptocurrency trading platforms. From late January to mid-March, Ether’s price experienced a steep upward trend as investors eagerly bought the digital currency in anticipation of the upgrade.

Ethereum developers aim to roll out the Pectra update by the beginning of 2025 at the latest, which could potentially boost ETH prices in the mid-term future.

Pectra is short for the Prague-Electra update.

Wall Street stock analysts at TipRanks commended the recent Pectra upgrade in a Nasdaq article, highlighting the enhancement of rollups and the introduction of a higher staking limit for Ethereum validators – 2,048 ETH.

5. Meme Coins (Advantage Ethereum)

Ethereum continues to hold the majority of the spotlight in the meme coin sector. However, Bitcoin’s entrance into the fungible token issuance game through the UTXO function, which uses the Runes technique, has become noteworthy in Q2. Significant developments like Dog Go To The Moon (Runes) have highlighted Bitcoin’s relevance within this specific market.

Using the Bitcoin Ordinals method, there were approximately five to ten million dollars worth of transactions for BTC-created NFTs on a daily basis, as indicated by Dune Analytics’ data in June.

As an analyst, I’d rephrase that statement as follows: The economic realm of meme coins within Ethereum is a vast and billion-dollar phenomenon that draws significant financial investments into Web3 technology, almost as if it’s the new global craze.

6. Competitive Analysis (Advantage Bitcoin)

In the year 2024, the struggle between Bitcoin (BTC) and Ethereum (ETH) for dominance is significantly influenced by the market conditions among other cryptocurrencies. There are numerous other digital currencies in existence besides these two.

In the dynamic cryptocurrency marketplace, Ethereum’s rapid expansion can be attributed to the stimulus provided by its formidable competitors. However, Ethereum faces a greater challenge than Bitcoin due to the presence of a larger number of contenders. The struggle for market dominance is a significant concern for this digital currency, making it more than just a technological innovation, plaything, or infrastructure – it’s a business enterprise.

Among BNB, Solana, Cardano, Avalanche, Aptos, and many other competitors, Ethereum holds a unique position with its limited supply of 21 million Bitcoins. The founders of Web 2.0 giants, Jack Dorsey and Mark Zuckerberg, are well-aware that the race for dominance in the Web3 space is about to intensify.

2024-06-22 23:00