Bitcoin (BTC) vs. Ethereum (ETH): Which Will Win Q3 2024?

The world’s number one and two leading cryptocurrencies by market capitalization, daily transaction volume, and crypto exchange volume have almost perfectly tied for ROI from Jan. 1 through the middle of June.

For comparison, the S&P 500 Index notched up nearly 15% over that same period. But that’s more than the broad stock market benchmark usually makes in an entire year.

So even during an unusually good two quarters for U.S. stocks, Bitcoin and Ethereum delivered investors four times more ROI. In other words, Bitcoin broke the government’s investment planning tool. Again.

The average annualized ROI for Bitcoin and Ethereum price performance since Jan. 1 is aces. The top two cryptocurrencies are pacing for a +116% year.

That’s a return so high that the compound interest calculator tool on Investor.gov does not even allow users to enter interest rates above 100%.

By the way— if you enter $100 a month into the calculator for 15 years at an estimated interest rate of 15% (above average for the S&P 500), with a daily compounding frequency, you end up with $68,815 in 15 years for capitalizing your country’s economy with a total of $18,100 in contributions.

If you do the same exercise with Bitcoin or Ethereum profits, and just enter 99% for the interest rate – the result is a little different (more like a bajillion dollars).

Question is which cryptocurrency will outdo the other in Q3, or will Bitcoin and Ethereum come remarkably close again to earning the same amount of profit for crypto investors in the next half of the year?

Here are six salient factors that may be worth considering. Some are more bullish for BTC, some for ETH, and some are a wash between the two blockchain network giants.

1. Fed Dollar Inflation (Advantage Bitcoin)

The center of gravity for the entire global financial system is the U.S. federal funds rate. It represents the cost for Federal Reserve banks to borrow cash from the ultimate lender in the economy.

The Fed interest rate calibrates the dollar interest rates for loan products all the way down the food chain to store credit cards and pay day lenders. When it goes up or down, so does the rest of the financial economy with it.

But when it goes up that’s a big headwind that puts downward pressure on prices for stocks and cryptocurrencies. However, when it goes down, there’s a big tailwind for investment products that tends to put upward pressure on their market prices.

It looks like there will be one interest rate cut for the U.S. dollar later this year. “If all of it happens to be as forecasted, I think one rate cut would be appropriate by year’s end,” said Philadelphia Fed President Patrick Harker on Monday. After the Fed left rates unchanged last Wednesday for the seventh FOMC meeting in a row, Investopedia reported:

“A bevy of tamer-than-expected inflation numbers over the past week has supercharged expectations that a Federal Reserve rate cut is ahead, but Fed officials themselves are proceeding with caution.”

“What we’ve been getting is good progress on inflation, with growth at a good level and with a strong labor market,” said Fed Chair Jerome Powell. “Ultimately, we think rates will have to come down to continue to support that. But so far, they haven’t had to.”

Meanwhile, other central bank economies, like those in the United Kingdom and South Korea, are getting antsy to cut rates.

Not if, but when the Fed eventually begins to trim rates back down again, it will be a tailwind for crypto, but especially for Bitcoin – because of its deflationary tokenomics, with a hard supply cap of only 21 million BTC tokens to ever be issued by the blockchain network.

2. DeFi and DApps (Advantage Ethereum)

Bitcoin is like digital gold, but Ethereum is like the automotive economy that burgeoned in the 20th Century as a result of the Industrial Revolution. Bitcoin is scarcity in the digital world of cyber abundance.

It turns out that a world without scarcity is missing something useful. Meanwhile, Ethereum is a vehicle to bring different parts of the economy closer together so they can engage in smart financial markets.

MetaMask, Oasis App, MakerDAO, and Uniswap usage statistics continue to wow in 2024. In February, MetaMask announced a 55% surge in users from 19 million to 30 million in a matter of four months.

The numbers are almost as high as the 2022 peak for MetaMask installations now. The company behind the Ethereum wallet says those 30 million users manage 100 million accounts with MetaMask.

Oasis App is a decentralized app (dApp) built on Ethereum. According to data hosted by BitDegree the app’s balance was worth some $1,769,996,160 in market value Thursday and the dApp had executed 308,620 transactions in the last 30 days (a 100% increase over the prior month).

Ethereum MakerDAO is one of those beefy, serious DeFi dApps making the Ethereum vision happen. The decentralized app’s native cryptocurrency, the stablecoin DAI, is a small economy unto itself, with a market capitalization this week exceeding $5.4 billion.

Meanwhile, Uniswap continues to impress. The leading decentralized exchange (DEX) for cryptocurrencies absolutely dominates other DEXs, ranking in fees almost as high as $100 million in total over the previous 30-day period.

The only Web3 apps to generate more fee revenue in the past month were: Bitcoin, Ethereum, Tron, and Lido.

3. Institutional Adoption (Advantage Bitcoin)

BlackRock CEO Larry Fink noted in March how the Bitcoin exchange traded fund was the fastest growing ETF in history.

BlackRock CEO Larry Fink says the $IBIT Spot #Bitcoin #ETF is the fastest growing ETF in history
pic.twitter.com/NOsDlFgROi

— Simon Dixon (@SimonDixonTwitt) March 27, 2024

Against every other cryptocurrency, Bitcoin and Ethereum both have an advantage in regard to regulatory approval. But against each other, Bitcoin still has a clear advantage going into Q3 2024. Hundreds of millions of dollars flow into and out of the Washington-regulated Bitcoin ETFs daily.

Former U.S. President Donald Trump now has the confidence to promote cryptocurrency to voters on the campaign trail. Before the last presidential election in 2020, Trump said he was anti-Bitcoin and crypto.

That is a strong signal of institutional and mainstream crypto adoption for Bitcoin and Ethereum. Trump recently said he wants all Bitcoin to be mined in the United States and he thinks it can help win the AI arms race.

Meanwhile, VanEck announced Thursday that it will be launching the first Bitcoin exchange-traded fund in Australia.

4. Prague Electra (Pectra) Update: (Advantage Ethereum)

The Dencun Update – the most recent major upgrade to Ethereum – was a massive boon to Ether’s market value on crypto exchanges. Ether price went parabolic buying the news from Jan. 24 until the upgrade happened on Mar. 13.

Ethereum devs plan to ship the Pectra upgrade by early 2025, maybe in Q4 2024, so this will be a bullish tailwind supporting ETH price in the background for the medium term.

Pectra is short for the Prague-Electra update.

The Wall Street stock analysts over at TipRanks recently praised the Pectra upgrade in an article featured on Nasdaq for the update’s enhanced rollups and new staking limit for ETH validators: 2,048 ETH.

5. Meme Coins (Advantage Ethereum)

Ethereum is still dominating meme coins, but the emergence of fungible token issuance on Bitcoin through the UTXO function using a technique branded Runes and some big hits in Q2 – like Dog Go To The Moon (Runes) – shows Bitcoin is a relevant player in this niche as well.

Through the Bitcoin Ordinals technique, BTC-minted NFTs remain popular and transacted in volumes of five and ten million dollars daily in June, according to Dune Analytics data.

The Ethereum meme coin economy, however, is a multi-billion dollar concern that continues to drive capital inflows to Web3 like the world’s gone mad.

6. Competitive Analysis (Advantage Bitcoin)

The competitive landscape is an important factor in the horse race between BTC and ETH. These are far from the only two cryptocurrencies in the world in 2024.

Ethereum grows faster because of motivation from its competition, but it has far more competitors than Bitcoin. Market share in a competitive landscape is a real issue for this currency. It’s not just a technology, toy, or platform; it’s a business.

While BNB, Solana, Cardano, Avalanche, Aptos, and a hundred others compete with Ethereum for DeFi market share, there is only one Bitcoin with only 21 million BTC. The Web 2.0 dons, Messrs Jack Dorsey and Mark Zuckerberg, both know the Web3 competition for those oranges is about to get fierce.