Ethereum vs. Bitcoin
Why Ethereum is performing better than Bitcoin?
Facts about Ethereum:
English text on the left side of the visual with Drake and Bitcoin & Ethereum logos on the right side
2024-01-31clock6 minutes

Ethereum vs. Bitcoin

Ethereum's (ETH) price demonstrates a noteworthy correlation with Bitcoin (BTC), mirroring similar price actions and aligning with momentum indicators. However, a closer examination reveals Ethereum's superior performance across various metrics, especially concerning large holders or whales.

  • According to on-chain data from IntoTheBlock, Ethereum surpasses Bitcoin in the number of long-term holders.

Recent on-chain data from IntoTheBlock highlights a substantial increase in long-term holders over the past year, with Ethereum outshining Bitcoin in this aspect. Specifically, Ethereum boasts an impressive 73 million long-term holders (individuals holding the cryptocurrency for over a year), while Bitcoin lags behind with 33 million. Delving into whale addresses, ETH boasts 5,370 addresses holding between 1,000 to 10,000 ETH, while BTC has only 1,920 addresses with a similar Bitcoin holding range. Notably, Ethereum dominates in the category of addresses holding more than 5,000 ETH, with 106,000 holders owning between 10,000 and 100,000 ETH, compared to Bitcoin's 103,670 holders. Additionally, Ethereum has 108 addresses holding more than 100,000 ETH, while Bitcoin has merely four addresses with an equivalent BTC holding. This data sheds light on Ethereum's robust presence among long-term and whale holders, emphasizing its distinct position in the market.

Why Ethereum is performing better than Bitcoin?

Until recently, Bitcoin enjoyed supremacy in terms of hodler numbers. Interestingly, both Bitcoin and Ethereum have witnessed remarkable runs this year, with notable increases in their hodler metrics. The question arises: what factors contributed to the significant shift in the dynamics, leading to a notable disparity between these two assets?

The surge in Ethereum's long-term holders can be attributed to several factors, with one of the primary contributors being the notable increase in Ethereum staking observed this year. The volume of staked Ether has nearly doubled since the commencement of 2023, constituting approximately 24% of the total circulating supply of Ethereum locked in staking deposits. A significant portion of these staked funds has remained untouched for over 12 months, leading to a substantial rise in the Holder Ratio. This surge in staking activity has played a crucial role in the increase of long-term holders for Ethereum.

Industry experts attribute the observed preference for Ethereum over Bitcoin to its dominance in the decentralized finance (DeFi) space. The proof-of-stake (PoS) token offers greater functionality and a wider range of use cases compared to Bitcoin, which is primarily valued as a digital currency.

Ethereum's versatile applications include:

  • Hosting other cryptocurrencies and stablecoins.
  • Facilitating the creation and trading of non-fungible tokens (NFTs).
  • Supporting the development of decentralized applications (DApps) across various sectors like finance, web browsing, gaming, and advertising.
  • Enabling access to financial services such as crypto-lending, yield farming, and initial coin offerings (ICOs).

The substantial share of ETH locked in the DeFi landscape, reaching $22.31 billion, significantly outpaces Bitcoin's $162.6 million within the same domain. This robust presence in the DeFi ecosystem contributes to Ethereum's larger number of long-term holders.

Despite Bitcoin's 31% year-to-date price increase, compared to Ethereum's 6.8%, the disparity emphasizes that cryptocurrency market dynamics extend beyond valuation alone. Ethereum's ability to attract more large holders showcases its appeal and influence, even as Bitcoin remains the leading cryptocurrency by market capitalization.

Facts about Ethereum:

  • Ethereum is the world's second most used cryptocurrency.

The first ever most used cryptocurrency is Bitcoin, considered “Crypto Gold” while Ethereum, the second most used cryptocurrency, called – “Crypto Silver”.

  • Unlike Bitcoin Ethereum does not have Limits

Unlike Bitcoin, which has a fixed cap of 21 million available coins, Ethereum does not have a definite cap. While there is no maximum limit on the total number of Ether, the annual mining limit is set at 18 million. This distinction suggests that Ethereum is on track to surpass Bitcoin, as its growth potential remains dynamic with ongoing annual mining opportunities.

  • Ethereum has it’s own Test Network

Ethereum offers developers a range of test networks for experimenting with smart contracts and applications, providing a cost-effective alternative to the main Ethereum network. Notable test networks such as Ropsten, Kovan, and Rinkeby have gained popularity, providing simulated environments where developers can thoroughly test and deploy their projects. These platforms play a crucial role in ensuring the robustness and functionality of smart contracts before they are implemented on the live Ethereum network.