Bitcoin and Ethereum remain far above the rest of the crypto market in terms of value. There are quite a few reasons for it, but one major common point is their pioneering status in their respective niches.
As an investor or trader in this market, you might be wondering how you can find the best moment for converting ETH to BTC. To assess this, we need to take a closer look at both Ethereum and Bitcoin — their advantages and disadvantages.
ETH in 2022: Upsides and Downsides
First, let’s have a look at Ethereum, the #1 dApp platform on a global level.
Ethereum remains the uncontested leader in the smart contract industry. With more than 2,900 applications running on its network, Ethereum is the cornerstone of DeFi, GameFi, and NFTs. The most popular decentralized finance projects run on Ethereum, which means that hundreds of thousands of users pay ETH gas fees to use its services.
All in all, Ethereum has a complete ecosystem of functional and proven software that provides users with increased utility for blockchain technology.
That said, the incredible popularity of Ethereum has taken a toll on the network and its capability for processing transactions. Ethereum’s current proof of work consensus mechanism doesn’t allow for great scalability when the network encounters mass usage. As a result, there have been occasions of network congestion, as well as gas fees reaching prohibitive prices.
This has effectively hindered the adoption of decentralized finance and has rendered NFTs too expensive to produce on a mass scale. PoW is also incredibly power-hungry, requiring as much electricity as a small country to run the network.
Plans for the Future
With that in mind, things are looking quite good for Ethereum in the future. The development team is working on the Ethereum 2.0 merge, which will migrate the current proof of work network to a much more sustainable proof of stake.
At first, this will remove the need for miners, making the network much more sustainable and eco-friendly. Furthermore, PoS will enable sidechains down the road, which will alleviate the computing weight on the main Ethereum chain. As a result, Ethereum will be able to cater to as many users as needed.
BTC in 2022: Upsides and Downsides
Next, let’s have a more detailed look at what is happening with Bitcoin, the highest-valued blockchain on the globe.
Bitcoin is the oldest cryptocurrency. It has proven time and time again that it can be considered a solid store of value.
Even though we are in a bear market, Bitcoin has conserved its value much better than the rest of the alternative cryptocurrencies, Ethereum included. Institutional investors often consider it as the only cryptocurrency worth accumulating during market downturns like we are currently experiencing.
Moreover, Bitcoin is pushing miners to switch to sustainable energy and is enabling a genuine cycle for utilizing unused energy.
Bitcoin’s PoW consensus algorithm remains an issue. With the energy crisis in Europe strengthening, regulators are looking to limit and even ban Bitcoin mining.
Equally, the price increase of Bitcoin has always coincided with the reward halving, which occurs every four years. Unfortunately, there are still two years until the next halving, which could prolong the current bear market substantially.
Plans for the Future
Bitcoin is like clockwork. Regardless of price, adoption, or market sentiment, the chain produces a new block every 10 minutes. What’s more, due to its limited quantity (21 million total), Bitcoin is becoming increasingly scarce, which will ultimately increase its price.
And finally, it’s worth noting that some countries are considering the original cryptocurrency as legal tender and are planning to follow El Salvador’s example.
BTC vs ETH: Which One to Invest In?
Choosing between BTC and ETH can be quite challenging. Both cryptocurrencies retain a lot of their upside potential, regardless of the bear market. Informed investors often decide to keep both of these cryptos in their portfolio, as they can decorrelate from each other and provide profit opportunities at different times.
Ethereum and Bitcoin deserve their popularity. They have managed to revolutionize the financial system and provide decentralized money and financial apps that seemed impossible a few years back.
Since they are the two most powerful crypto projects, you can’t go wrong with either. However, altcoins are struggling, so you might want to sell your alts for Bitcoin and convert coins like ETN to BTC to limit the damages during the bear market.
Ethan Moore, crypto and stock trader since 2012. Co-founder of Blockwatch experts team.