Bitcoin’s store of value vs Ethereum’s technological utility

Over the last few months, the crypto internet has been dominated by the Bitcoin ETF talk. And for a good reason. At a $835.7 billion market cap, the pioneering crypto makes up 49% of the total crypto market, consisting of tens of thousands of tokens.

In Bitcoin’s 15-year life cycle, an exchange-traded fund (ETF) represents a pivotal divergence, a milestone in legitimacy. Once derided as “fraud” akin to tulip mania, “rat poison,” or “index of money laundering”, Bitcoin’s entry into the ETF arena discards those perception rags and replaces it with a brand new coat.

Long-Term Trickling from a Deep Pool

Having the blessing of the Securities and Exchange Commission (SEC) means that institutions can start apportioning their capital into a high-yielding asset. Bitcoin fits the bill because, even more so than gold, its supply is affixed, and even though Bitcoin is digital, it is grounded in physicality via the proof-of-work mining network.

As of October 2023, US ETFs have $5.6 trillion worth of equities. Even in low single-digit percentages, capital trickling into Bitcoin is poised to create a rising tide, a feedback loop owing to Bitcoin’s limited supply. Without the hassle of custodianship, investors get exposure to this tide, represented as ETF shares that track Bitcoin’s spot price.

Just one such Bitcoin ETF applicant is BlackRock. The world’s largest asset manager had already lined up capital to the tune of $2 billion, according to sources.

Following the approvals on January 11th, an expected sell-pressure transpired in a classic “sell the news event,” bringing the BTC price down -7.4% over the week. Yet, launching a new investment vehicle has been successful, tracking over $1.4 billion in AuM and $3.6 billion in volume in just two days.

But what of Bitcoin’s long-following shadow, Ethereum? Having transitioned from proof-of-work to proof-of-stake, the Ethereum project is perceived quite differently from Bitcoin. What are these differences and…