Why should Bitcoin holders buy Ethereum?

Why should Bitcoin holders buy Ethereum? With spot Ethereum ETFs emerging in the US, should existing Bitcoin ETF holders add ETH to their cryptocurrency holdings? In a Twitter post on Thursday, Bitwise Chief Data Officer Matt Hougan provided three reasons why this might be a good idea. Today, the editor of this website will share with you the reasons why Bitcoin holders should buy Ethereum Detailed explanation, friends in need should take a look!

Why should Bitcoin holders buy Ethereum? Hougan writes that the first thing is to diversify. Since predicting the future of cryptocurrencies is difficult, holding two leading cryptoassets can be beneficial to investors in case one asset falls out of favor or eats up the other over time. "Just ask any investor who bought AOLPets.com during the dot-com bubble," Hougan said. “Their overall bet was right — the internet is going to be huge! — but the specifics were wrong. Sad!” As of this writing, Bitcoin’s market capitalization accounts for 10% of the entire crypto market, according to TradingView 55%. Ethereum accounts for 18.6%. While ETH has performed essentially on par with Bitcoin over the past five years, its dominance of the top cryptocurrency has slowly faded since the merger in September 2022. However, the ETH/BTC ratio received a small boost last month after it was allowed to accept U.S. spot ETFs. Secondly, Hougan said that the fundamental differences between Bitcoin and Ethereum make it difficult for people to choose between them. Bitcoin's optimization goal is to become a "bettercurrency", while Ethereum is designed for "programmable money" and can support blockchain applications such as stablecoins and DeFi. “Adding some ETH to BTC’s dominance gives you broader exposure to all the things that public blockchains can do,” he said. BTC and ETH both recorded bestperformance In the end, Hougan said both The historical performance of each asset class shows that they work best when balanced in a portfolio. For example, when weighted 70/30 (56.32%) between BTC and ETH allocations, a “traditional” 60/40 portfolio with a 5% cryptocurrency allocation had higher cumulative returns over the past four years than a pure allocation to BTC The cumulative rate of return (54.49%). Surprisingly, its “Maximum Drawdown” was even lower than that of the pure BTC portfolio at the time, with a drawdown of only 25.19% at the peak compared to 25.35% at the peak. However, Hougan said the main reasons why investors might just want to hold on to Bitcoin remain. “Bitcoin is likely to be the dominantnew form of ‘money’ to emerge among cryptocurrencies,” Hougan said, citing its huge existing lead and community orientation in the market. "Money is a huge market. Bitcoin has a lot of room to run if it succeeds," he said.

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