Bitcoin is certainly the most widely known cryptocurrency worldwide, but its sister cryptocurrency Etherum, which is the next most commonly known cryptocurrency, has yielded more returns in the last one year.
Let us consider the current data on both these virtual currencies available on Investing.com. Ethereum has grown 1,060.64% in one year while Bitcoin has grown over 692%.
In fact, experts believe both the currencies have recorded much higher growth over the last year, giving huge returns to investors.
Ethereum was around Rs 10,000 in March 2020. It went up to Rs 1,24,000 recently but now has fallen to Rs 1,18,000. Bitcoin, on the other hand, was around Rs 4,61,000 in March 2020. It touched Rs 41 lakh few days ago but has now fallen to Rs 38 lakh, according to Investing.com.
Experts say that this phenomenon is due to the fact that prices of Ethereum are driven by its own technology. “Reason behind this kind of increase is that Bitcoin is widely used to hedge against the US dollar while Ethereum has their own system backed value which aims to build an ecosystem of decentralised applications,” says Kshitij Purohit, Product Manager, Currency & Commodities, CapitalVia Global Research Limited.
“Institutional investors are now going towards Ether and almost $800 million inflows have come into the currency.”
Despite the returns it has delivered, Ethereum is not experts’ first choice when it comes to buying cryptocurrency. Arun Vijay, co-founder at Giottus, a crypto exchange is of the opinion that Ethereum looks bullish in the short-term but Bitcoin is for the long-term.
“Ethereum has delivered stupendous returns over last 1 year and can be expected to outperform Bitcoin in the short term but this also comes with risk as Ethereum shows higher volatility in comparison with Bitcoin,” says Vijay.
“Bitcoin has behaved in a more reliable manner, having been around twice as long as Ethereum.”
Purohit feels that since Ethereum is purely backed by technology, it is a riskier bet of the two.
Experts are of the opinion that while one is growing faster than the other, the bet should not be either of the two. Instead, those investing in cryptocurrency should consider buying currencies based on their risk-appetite.