Sorry if you're seeing this post a second or third time, but some folks suggested I make a standalone post of it, so here it is.
This is a quick and dirty analysis of some of the fundamentals and trends I'm keeping an eye on for the coming months and years around ETH and BTC. If you find it useful, please share with others, and if I've missed anything, please discuss in the comments.
Since it's likely to come up as a question, I'll disclose that I'm holding approximately 80% ETH and 20% BTC at present.
Pros for Ethereum in the Coming Months / Years
- Tremendously undervalued versus BTC compared to historic trends, and markets naturally cycle
- More reflexive price action versus BTC could trigger explosive price gains and absorb massive speculative interest, given current smaller market cap
- Very strong positioning as the #2 coin, far ahead of the rest of the pack- and most likely candidate for crypto fund investment to seek alpha beyond BTC
- As #2, will naturally "draft" off of BTC mainstream financial institution adoption (next in line for futures, ETF, and institutional adoption- when those happen)
- Strengthening utility and narrative around ETH as a programmable store of value / programmable money, creating further reserve demand and monetary premium
- Failure of Ethereum Killers to gain any traction over the past 2 years, and none are close being considered as a form of "money"
- Eth 2.0 Phase 0 coming in early 2020, with Phase 1 to hopefully follow later in 2020. Phase 2 in 2021 (hopefully) will bring massive scalability improvement
- Very strong network effect, now likely Lindy Effect, as the preeminent programmable blockchain with predominant share of developer and user interest
- Emerging brand and reliability as an asset / economic settlement network, without real competition
- DeFi apps are starting to raise crypto-ecoystem awareness around Ethereum's capabilities, and the value of ETH as a form of money / collateral
- L2 capabilities coming soon (TM)
Cons for Ethereum include almost zero brand recognition among the mainstream (this also presents an opportunity), poor / muddled marketing narratives which institutional and mainstream investors cannot yet grasp, FUD from Bitcoin and other projects' communities predominantly targets Ethereum as everyone competes against it, poor understanding around ETH supply (no hardcap, and market doesn't understand planned low issuance / fee burn under PoS), lack of current scalability, technical risk in Eth 2.0 implementation, community risk in upgrade decisions (e.g., ProgPow), and app failure risk (leading to stack failures and short term reputation hits).
Pros for Bitcoin in the Coming Months / Years
- Brand recognition is unmatched (a lot of people don't know the difference between broader crypto and Bitcoin)
- Easy to understand fixed supply narrative, and already understood by much of the initially addressable investing populace ("digital gold")
- Digital gold use case (if you accept it) doesn't require much or any technological progress for L1
- Upcoming halvening is a good memeable event
- More reliable / proven prior market performance history, with widely accepted "$100K to $200K on next cycle" memes
- Likely to receive first tranche of investment from mainstream financial institutions (if/when they start to enter the crypto space)
Cons for Bitcoin include intransigent and overconfident community (they'd say it's a pro), community can't stop talking about Ethereum because there's nothing not much new/interesting to talk about for Bitcoin, poor scaling (Lightning Network isn't a resounding success at present, and no Plan B), increased community movement towards centralized storage / service solutions (defeats the purpose of decentralization and creates growing honeypot hack risk), increased awareness and criticism on the environmental impact of PoW mining, delusions of grandeur around how BTC will transform global money (betting on economic collapse in some cases, or hoping that central banks will print money off of BTC...if they wanted to do this, they could just use gold, again), and 21M meme hardcap is likely not long-term sustainable.
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