Bitcoin, the crypto with the highest market cap is at a high of $6.5k. Ether, the crypto with the second highest market cap is stagnant at $300. Is Ether a good buy at $300? See CoinMarketCap.com for an ordered list of coins by market capitalization.
NOTE: Shortly before the Segwit2x fork it is very likely that alts will dip hard only to recover right after the fork. This was the case with Bitcoin Gold, it is reasonable to think it will happen with Segwit2x. Watch for it.
UPDATE: Given the recent spike in Bitcoin and decline of Ether directly following this article, let’s re-frame the question for a second and ask, “with Bitcoin at $7k is Ether a good buy at $280?” Answer is generally “yes.” $300 Ether vs. $6.5k Bitcoin was a little “meh” (good, but a little “meh”). At $280 Ether vs. $7k Bitcoin, Ether is looking a lot better. Still, no one knows for sure, including me. Do your own research and buy at your own risk. Back to the original article…
…To get the answer to that question we have to consider a few basic points (most of which involve comparing Ether to Bitcoin):
- On one hand Ether is a lot like Bitcoin in many ways. Just like Bitcoin is a cryptocurrency token existing on the Bitcoin blockchain (a smart contract system), Ethereum’s network is a decentralized smart contract platform with a cryptocurrency token called Ether. Just like Bitcoin, Ether has a limited supply, and just like Bitcoin, Ether has limitations in terms of speed. This list of similar pros and cons goes on, but that should give you the gist.
- On the other hand, Ethereum is its own beast. Ethereum’s network is a bit more open source and a bit more versatile than Bitcoin’s network. It allows any developer to create a unique coin (most ICOs are ethereum-based) and it allows for types of contracts other than tokens (like insurance contracts for example). It even has potential for unique blockchain based apps. Not all its perks have been widely used or realized, but there is a lot of cool going on here.
In sum, while the basics of the two system are similar, Ether it is not exactly the same as Bitcoin in terms of fundamental tech or potential uses. And, as we’ll cover below, its not exactly the same as an investment either. Consider the following points:
- Ether’s rise to the top started a lot later that Bitcoin’s. If it preforms like Bitcoin did over time, then the days of another wild growth spurt could be years out. If this is true, it would make Ether a long term bet (but that bet would have risk related to crypto sticking around that long).
- Ether has seen more gains overall than BTC this year. Since the summer it has been tempting to see Ether as stagnant and Bitcoin as the clear winner in terms of ROI… but consider the whole year, and Ether actually had better gains over all (they just slowed down mid-way through the year).
- Ether tends to follow Bitcoin at some times, but not at others. It doesn’t always follow spikes in Bitcoin’s price… but sometimes it follows dips. Assuming Ether is a good buy just because Bitcoin is going up is often a bad bet. In fact, a good portion of the time people seem to sell off Ether to go into Bitcoin when its doing well. Bitcoin is high right now, Ether is not (people are selling off Ether to move into Bitcoin).
- Price predictions for Ether (such as this) very, very generally show resistance at prices like $275, $290, $310 (to offer round whole numbers that aren’t exactly right on a given day). That means investing in it probably won’t net you much of a short term gain or loss (where a pullback in Bitcoin’s price could be harsh). Of course, Bitcoin has rarely pulled back for long, and there is lots of upside.
- Ether may be the top 2 crypto, but it isn’t the only Bitcoin alternative (altcoin). Sometimes when people go out of BTC, they go into the thousand-and-one alts (not directly into ether). Thus, even if people go into alts in the event of a BTC pull back, it still doesn’t make Ether the perfect buy.
BOTTOMLINE: $300 (give or take a few dollars) has been a historically decent price for Ether. If you are looking at long term investments, $300 Ether could be a really smart move (the chances of it doubling or tripling over time are high if crypto sticks around). However, in the short term, Bitcoin has outperformed Ether at nearly every turn (not at every turn, but just at nearly every turn). Thus, like with anything crypto related that isn’t Bitcoin itself, it is a good bet in some ways… but historically, it isn’t a great bet compared to Bitcoin.
NOTE: The author owns Ether and a few Ethereum-based coins (and up until yesterday owned Bitcoin; will re-enter a position shortly… but couldn’t pass up taking profits on $6.5k Bitcoins; regret likely imminent). I personally think Ether and Bitcoin are smart buys for the long haul at any price, but in the moment, clearly Bitcoin has outperformed the crypto market (and most other markets on earth). With that in mind, the above isn’t meant as investment advice. Its meant to give you food for thought when thinking about what to do with Ether vs. Bitcoin. At $300, the price of Ether is historically [since the summer] common and Bitcoin is historically high. Yet, Bitcoin keeps going higher and Ether stays stagnant. Thus, Ether doesn’t invoke strong feelings one way or the other in the short term compared to itself (although compared to Bitcoin its a little disheartening). Meanwhile Bitcoin is exciting and scary in the short term. Short term aside, in the long term, its hard to ignore the second highest coin by market cap. From that long term lens, stocking up on $300-ish Ether over time via dollar cost averaging is not a bad strategy and neither is buying Ether sub-$300 while everyone else rushes into Bitcoin (especially if you plan hold long term or take profits above $300)… as long as you don’t compare those gains to Bitcoin in the here and now.