Summary Gold and silver have a similar relationship to Bitcoin and Ethereum with both the 'number twos' being the racier of the pairs. As the young pup, Ethereum has the potential for greater upside compared to Bitcoin. Ethereum may hit a trillion-dollar valuation if the crypto market follows previous patterns. Boomers like me are well acquainted with the idea of silver being ‘fast gold.’ That is to say, gold and silver are linked in value but when precious metals motor, silver is the asset with ‘ping,’ which goes up faster and further and is likely to come down quicker and deeper than gold. In crypto, Bitcoin (BTC-USD) and Ethereum (ETH-USD) have a similar relationship. Ethereum is the faster of the two when the going gets spicy. Here is a chart to illustrate the point. ADVFN Ethereum is a less seasoned asset compared to Bitcoin. It was created years after Bitcoin so this ‘outperformance’ can be put down to Ethereum being in an earlier epoch of development, and as such having a more youthful upside. This is a matter of opinion but as crypto is driven by camps of faithful token acolytes rather than by the cold, hard skepticism reserved for most stocks and bonds, these kinds of fluffy ideas hold sway. What is most certainly true is that if Bitcoin continues on its current road of appreciation, part of an apparent four-year cycle much driven by the periodic halving of its new supply, then Ethereum will run up alongside. Likewise, the minor ‘altcoins’ will also flourish in this bullish part of the Bitcoin crypto boom and crypto winter cycle. Currently Bitcoin is running ahead of Ethereum in its ascent towards previous highs; it is approximately a third away from its ATH while Ethereum would need to rise 66% to hit its previous top. Not many people would bet against new crypto ATHs being in the offing, and in this scenario Ethereum would seem to offer more upside this year than Bitcoin. Yet all-time highs are not the limit of expectations. The crypto world is waiting for the next price multiple, an event that many see as historically inevitable. In the past, Ethereum has taken over the crypto rally from Bitcoin at the end of the initial take off sequence, with the crazy altcoin being the final huzzah before a mighty pull back. The hope and expectation in the crypto sphere is that this pattern will repeat. In addition to the general tailwind of the Bitcoin ‘Halving,’ Ethereum is likely to gain its own stable of ETFs in the not-too-distant future, and this will also be expected to drive its price upwards. To a crypto bull, the following chart is a template for what happens next with the future echoing the past but at bigger scale. ADVFN I won’t bother drawing it, but an Ethereum bull will be seeing $10,000-$15000 as a high. It is hard to swallow but crypto is an all or nothing game. You can’t really half believe in crypto. Crypto is either amazing or trash; it’s either going to boom or become the next hula hoop. A calming of the crypto market, bringing it to a more predictable and sedate state seems, at least currently, unlikely. The bottom line for crypto traders is Ethereum has a market cap of $350 billion and Bitcoin has a market cap of $1 trillion. If this crypto summer is like the previous two or the several before it, then Ethereum can hit the trillion-dollar valuation. Meanwhile, for a crypto bull, the market remains in the early stage of the boom part of the cycle with an inevitable mighty climb to come. It’s a heady cocktail and not for the faint hearted but the joys of the new Bitcoin ETFs make it easier to consider whether a little BTC in the portfolio might be worth holding for the ride. I’ve chosen Ethereum as part of my exposure to the upcoming ‘halving.’
