Bitcoin and Ethereum are the two unequivocal market leaders when it comes to cryptocurrencies. Bitcoin is the original crypto and represents the most solid store of value in the industry. Ethereum is the first smart contract platform and has revolutionized the entire niche by enabling hundreds of use cases for cryptocurrencies.
If you are looking to see whether you should convert ETH to BTC, you’ve come to the right place. We will explore some of their fundamentals and analyze their market positions in 2022. Finally, we look at the pros and cons of exchanging ETH for BTC so that you can make a decision.
ETH Market Position in 2022
As we mentioned, Ethereum is a smart contract platform, the first of its kind. This means that as a pioneer in the industry, it has become the leader of the decentralized finance paradigm, hosting more than 90% of all DeFi on its platform.
Ethereum was created on a PoW network, and this consensus mechanism quickly showed its limitations regarding the mass scaling of the platform. Ethereum was designed to act as a global supercomputer, which requires millions of transactions on a daily basis, whether through value transactions or smart contract communication.
However, Ethereum’s PoW has a very low throughput of around 15 transactions per second, which hinders the mass adoption of the network. For this reason, developers are working on a merge towards a PoS consensus mechanism, which will be faster, more energy efficient, and cost-effective.
This merge is going live in September 2022, which means that the price of Ethereum should gain some upward momentum prior to and following this event. Since the bear market began, Ethereum had already recovered a lot of its value from a low of $950 up to $1,700 in a matter of a couple of months. Many market experts are expecting it to continue this upward trend and even reinforce it if the Merge goes smoothly.
BTC Market Position in 2022
Bitcoin remains the top dog when looking at the market cap of cryptos. It has been around longer than any other digital asset and has gained the trust of millions of investors worldwide. It sits quite comfortably as the #1 crypto, hoarding 40% dominance versus more than 20,000 other currencies.
While its PoW consensus mechanism remains quite slow for daily payments, Bitcoin’s major use case has evolved into a store of value. Institutions like Microstrategy and major financial players use BTC as a hedge in their portfolio to benefit from the major bullish cycles it undergoes regularly.
That said, the bear market hasn’t been too kind to BTC in the past few months, On multiple occasions, the original crypto has fallen under the $20,000 mark, which is considered by many as a major support level. The reason behind this is that this price level was the previous cycle’s all-time high, and is considered a danger zone if crossed on the downside.
In the past months, Ethereum has been overperforming BTC, as the latter seems to be stuck between the $20-$25k range.
ETH to BTC: Pros and Cons
With all that in mind, what are the pros and cons of exchanging ETH for BTC now?
Pros
Considering that the Merge could go south, ETH could drop quite significantly in value in the next weeks. BTC remains isolated from the Ethereum network and could gain significant value if this happens.
Cons
The Merge is the true promise of greatness for ETH. The chain could become much more valuable thanks to staking and exponentially better scaling, which could increase its value significantly.
Final Note
It’s always challenging to determine when it’s the best time to exchange ETH for BTC. This is a crucial point in Ethereum’s history and could both play in favor or against its value. However, the consensus is that the Merge will most likely allow Ethereum to thrive, so waiting for the event to complete is the best thing you could do right now.
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