We want to help you make more informed decisions. Some of the links on this page — clearly marked — may take you to an affiliate website. and may result in earning us a referral commission. Find out more at how we make money
So you have done your research. understand your risk And make sure that any possible crypto investment doesn’t hinder your other financial goals. Now is the time to choose your coin.
Financial experts say it should start with two of the most famous cryptocurrencies on the market right now: Bitcoin and Ethereum.
(Also read: Is Crypto in Your Portfolio? These 4 Questions Can Help You Decide)
It is the two largest cryptocurrencies by market cap and exchange volume. But they are very different when you look beyond the popularity they share. Although either option is a good choice for beginners in coding. Determining what̵7;s right for you You may need to take a closer look at your own goals.
Bitcoin (BTC) Price vs Ethererum (ETH) Over Time
Note: Based on CoinDesk historical data using the closing prices of Bitcoin and Ethereum since 2015.
Humphrey Yang, the personal finance expert behind Humphrey Talks, said, “I strongly believe that you should understand what you are investing in.
In addition to the technical differences in the two cryptocurrencies, Bitcoin and Ethereum offer two completely different value propositions for investors. This may be a deciding factor for you.
“I think [which one you should buy] It depends on what you believe is more important in terms of the fundamental value that Bitcoin and Ethereum offer. cryptocurrencies I believe the two serve two different purposes where everyone will have different opinions,” said Dan Herron, CPA of Elemental Wealth Advisors.
Bitcoin was the first digital currency and known as digital gold. Bitcoin is the most valuable cryptocurrency on the market. Although there is not much volatility One coin has ranged in value from less than $30,000 to over $60,000 in recent months. However, many investors view Bitcoin as a store of value, such as gold, that can serve as a hedge against inflation.
Investing in Bitcoin is different from investing in the stock market. With better predictable returns on investments such as index funds, investing in Bitcoin is comparable to investing in gold or alternative assets such as art or horses. That’s because there is a limited amount of Bitcoin. While companies can issue more stock options, only 21 million Bitcoins will be available.
People buy Bitcoin “for the same reason people would have diamonds, or $100 bills, or some gold coins in a safe,” said Galen Moore, director of data and indexes at Coindesk, a leading cryptocurrency news source. Even though the dollar is falling, Bitcoin is like gold. will still have separate values
You won’t see Ethereum described as digital gold. Ethereum is a software platform that allows developers to build other crypto-focused apps. To use Ethereum, developers have to purchase and pay fees to the network in cryptocurrencies. The original digital version of Ethereum is ether.
Buying Ether makes Ethereum investors bet that the continued use and expansion of the Ethereum network will mean more developers trying to get in – and buying Ether to pay fees. The more people buy ether, the more The higher the value of the ether, the higher it will be.
While it’s not a direct comparison like Bitcoin and gold, some experts compare investing in Ethereum to investing in tech companies.
“It acts as a technology platform. Like money,” said Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency analytics platform. “Think of it like a Google stock.”
If you are just an investor not a developer Buying Ether is a gamble that more and more people are taking. will use and expand the capabilities of Ethereum
Should I buy Bitcoin or Ethereum?
There are similar risks associated with both Bitcoin and Ethereum, and the possible growth of both is highly speculative. As the top two cryptos in the market, most experts say that both are good options. If you are just starting your crypto investment journey. And others say it’s a good idea to split the difference and invest in both.
Professionals often agree to keep crypto investment Make less than 5% of your investment portfolio. And only if investing in crypto won’t hinder things like building an emergency fund and paying off high-interest debt.
Others argue that although Bitcoin is more acceptable But the technological potential of Ethereum goes beyond that.
“[I would] One may invest in Ethereum as it has the highest potential in an established crypto. This is because products like NFT are part of the Ethereum blockchain,” said Ryan Sterling, CFP and founder of Future You Wealth. “In addition, there seems to be an increase in adoption and acceptance of Ethereum.”
Vrisin Subramaniam, founder and financial planner at CapitalWe, said an upcoming update to the Ethereum network could draw more attention to Ethereum in the coming months. That is why he chooses Ethereum today, but he also recognizes the potential of both cryptocurrencies. “We are still in the early stages of adoption. And I think both Bitcoin and Ethereum will continue to have value. I see Bitcoin as the mainstream of both, while Ethereum is the more useful of the two,” said Subramaniam.
Then an investment expert asked me why I had to choose?
“If I had to choose between the two I’m not going to force the question of ‘Which one’, but choose both,” Beckett Collective’s Theresa Morrison, CFP.
“I would invest in both,” says Jeremy Schneider, the creator behind Personal Finance Club on Instagram.
How to invest in both Bitcoin and Ethereum
Even if you choose to shop for both Bitcoin and Ethereum, your personal financial goals and knowledge of cryptocurrencies can play an important role in the amount of money you allocate to each coin. If you are going to split your investment, Subramaniam recommends a 60/40 split and Sterling recommends a 50/50 split.
You can also consider investing with a market capitalization-weighted strategy whereby your proportional investment in each asset is based on market capitalization,” says Schneider. for digital currency Market capitalization refers to the total market value of all coins mined. If you start with $100 and want to invest in Bitcoin and Ethereum, that would be $71 in Bitcoin and $29 in ETH by current market cap.
Schneider also recommends using this strategy if you plan to diversify into more coins in the future. For example, a $10 $100 portfolio by market cap would look like this:
- Bitcoin (BTC) 54.4%
- Ethereum (ETH) 21.9%
- Tether (USDT) 4.9%
- Binance Coin (BNB) 4.3%
- Cardano (ADA) 3.7%
- Dogecoin (DOGE) 3.2%
- XRP (XRP) 3.1%
- USD Coin (USDC) 1.8%
- Dot pattern (DOT) 1.6%
- Uniswap (UNI) 1.0%
No matter which method you choose Experts warn against overinvesting your portfolio in crypto assets. In general, you should invest crypto under 5% of your portfolio.
(Also Read: Here’s How Much Your Portfolio Should Be in Crypto, According to 5 Experts)
Should I Consider Other Cryptos?
Definitely not a newbie. According to the experts we spoke with, altcoins are more unpredictable than the already volatile Bitcoin and Ethereum.
“It’s like playing penny stocks,” says Nate Nieri, CFP and founder of Modern Money Management. There will always be a loser in a long way. Your guess is as good as the others.”
“I only look at Bitcoin and Ethereum,” Sterling said. “Like the dot com boom in 20 years, I wonder if cryptocurrencies Most of them are worthless except Bitcoin and Ethereum.”