Judging by the situation we have today, there are few chances that Ethereum could reach the Bitcoin price (if this is what you mean).

The Situation as of September 2018

At the beginning of September 2018, Bitcoin is trading over $7,200, while Ethereum is trading below $300. Can you see the difference? There is a big gap between the prices, and it cannot be filled just like that. In fact, Ethereum started the year at over $750, so it doesn’t get anyway closer to Bitcoin but rather moving downward.

A leap from $300 to $7,000 suggests that Ethereum has to gain over 2,230%, which is a crazy return figure even for a cryptocurrency.

Why Ethereum Won’t Reach BTC Price?

Even though Ethereum is more functional and useful than Bitcoin, the latter is targeted by institutional investors, who are pushing the demand up. Ethereum has been supported by countless blockchain projects that have conducted initial coin offerings (ICOs) based on its smart contracts. There are dozens and hundreds of new tokens based on Ethereum, which were released through sales in exchange for Ether coins (often together with Bitcoin). This helped Ethereum consolidate its position as the second largest cryptocurrency by market cap, but its price is still far away from Bitcoin.

In mid-January 2018, Ethereum was trading above $1200, as ICOs were trendy and investors wanted to find the next big crypto coin. In the same period, Bitcoin was trading above $14,000. The ratio between Bitcoin and Ethereum was 11.7.

However, as time passed, institutional investors came in, and they have been mainly interested in Bitcoin, as they see in it a method to store value. Big investors with millions to spend are not really interested in the next big coin that could bring 1,000% returns. They want to stick to quality investment opportunities that would mitigate the high risks and would preserve value in the long term. Thus, Bitcoin is the first option that comes to mind.

Institutional investors try to multiply their channels through which they can enter the markets, targeting different Bitcoin-related instruments like options, futures, exchange-traded funds (ETFs), and other funds. At the end of December 2017, Chicago-based CBOE and CME launched Bitcoin futures trading, which demonstrated that Wall Street didn’t want to stay aloof from the crypto phenomenon, and that big investors are interested in a product that doesn’t relate to traditional instruments, such as fiat currencies, metals, commodities, real estate, etc. Thus, they see Bitcoin as a hedge against a total crisis or something like that.

The point is that institutional investors are responsible for making Bitcoin trendy again, even though its price has declined year-to-date. Today, the ratio between Bitcoin and Ethereum is 24, which suggests that the gap more than doubled.

In the coming years, we should see more Bitcoin-related instruments, like ETFs, as the they are still blocked by the US Securities and Exchange Commission (SEC). When ETFs and other Bitcoin funds become trendy, BTC’s price will move even higher, leaving Ethereum behind.

In conclusion, the current impression is that Ethereum cannot reach BTC in terms of prices, but who knows? The financial markets are unpredictable. Who could anticipate the rise of Apple, Google or Amazon when they were small players?

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Posted by Min Park

Blockchain Marketing Consultant

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