This week, the price of Ethereum on cryptocurrency exchanges saw a significant increase. What is the story behind it, and what should investors look for when deciding which cryptocurrency to invest in—Ethereum or its companion Cardano?
On July 30, Ethereum will turn 30 years old. It was introduced in 2015 with the goal of building a “global computer” that could be used for payments and cash storage that has the same Web3 blockchain capabilities as Bitcoin. Cardano was founded by Charles Hoskinson, a co-founder of Ethereum, and debuted on September 23, 2017, via an initial coin offering (ICO). In terms of market valuation, it is currently the tenth-largest cryptocurrency.
Ethereum Market Capitalization as of May 22: $451.8 billion As of May 22, Cardano had a $17.2 billion market cap. There are certain distinctions between the two cryptocurrencies that work to one’s benefit and provide solid grounds for positive or pessimistic sentiment toward ETH or ADA tokens.
However, some of the distinctions between the two networks involve trade-offs that are harder to assess in terms of whether they benefit either cryptocurrency. The following 7 important variables will affect Ethereum’s price in relation to Cardano in the future:
1. ETH vs. ADA – Technical Analysis
After a spike this week because to the buzz over Ethereum spot ETFs, the price of Ethereum has almost reached its all-time high again. Cardano still has a ways to go. Given that there may yet be further potential in ADA’s price, that may actually be more positive. The recent approval of an Ethereum ETF is expected to upend the Ether investment landscape. Another 12.5% increase would propel ETH to $4,500, within striking distance of the previous Ethereum ATH of $4,721 in November 2021, should bulls push the price above $4,000.
Forbes just stated that they believe Ethereum will reach $5,000 by the end of 2024. VanEck, the maker of Bitcoin ETFs, projects $11,800 by 2030. Even more optimistic predictions call for $10,000 ETH by year’s end. Short-term Cardano technical indicators and weekly moving averages suggested Thursday was a good day to “sell.” Investing.com research indicates that Ethereum technical indicators for the seven-day period suggested a “Strong Buy.”
2. Ether Spot ETF – Regulatory Analysis
Nothing can argue with it. U.S. officials appear to favor Bitcoin and Ethereum over Cardano and other DeFi networks, which Charles Hoskinson would undoubtedly agree with. In October, the SEC gave Ethereum futures ETFs the go-ahead, indicating that it did not appear to consider Ether to be an unregistered security.
But in litigation against several blockchain companies, the U.S. agency has labeled Cardano and other cryptocurrencies as unregistered securities, excluding Ether and Bitcoin. Furthermore, even though the agency has filed several lawsuits against cryptocurrency companies since April 2023, it has never included Ether as a security in its accusations, according to a May 1 article in Fortune Magazine.
Since December 2020, the SEC litigation against Ripple has dragged on for years without a resolution. It is expensive and uncertain for the currencies targeted by the government in the long run. Markets detest unpredictability. Even though it might not be fair, this indicates that ETH is bullish while ADA is bearish.
3. ADA vs. ETH – Fundamental Analysis
The ideal approach for investors who are not complete lunatics is fundamental analysis. When a fundamentalist examines an investment opportunity, he or she does not use chart technical analysis or meme currency voodoo economics. Rather, they ask themselves what author of “The Intelligent Investor,” Benjamin Graham, would do.
A business might be a wise investment if its projected future revenues, discounted to the present, are higher than its current market value. It could not be a wise investment if they equal or exceed the market capitalization of the company. ADA: $263.8 million TVL / Market Cap: $16.4 billion ETH (3% yearly reward rate + 121% annual growth rate) $64.9 billion TVL / $453 billion market capitalization (5.5% annual reward rate + 145% annual growth rate).
Without any more context, the data above suggests that Cardano would win since inflows account for a considerably smaller percentage of its market capitalization than Ethereum (0.019 to 0.22), but only if we assume that Cardano will expand at the same rate as Ethereum in the future.
That will be challenging for Cardano given the unequal institutional acceptance between the two until it develops a use case, a feature/benefit, and a story that disrupts the coin retail Internet markets.
4. Cardano vs. Ethereum
Cardano has more consistent and cheaper fees, but Ethereum has greater fees as a feature rather than a drawback. They increase the cost of abusing the network for non-profit cybercrime, making it more secure. large organizations such as that. This is one of the reasons why the slow, pricey network with poor transaction bandwidth of the market leader, Bitcoin, is able to retain its capital so successfully.
These upfront expenses qualify participants immediately and without discriminating on any grounds other than their capacity and desire to pay the network’s fees, which makes them more qualifying than Know Your Customer standards in many respects.
However, smart contract blockchain networks with cheaper costs, such as Cardano, provide an edge for newbies, enterpreneurs, companies, and investors beginning out with a lesser cash pile. On both networks, transaction costs are very erratic and increase during times of heavy traffic.
