The Coin With The Most Upside Potential
Diversification is imperative for any portfolio and one needs to thoughtfully structure a winning design based on as much data as possible. My portfolio is currently dominated by BTC and ETH, with ETH taking the lead, for now. Ultimately, I believe that ETH currently has the highest likelihood of being able to increase in BTC value. There are a lot of other projects that could perhaps perform extremely well against BTC in the coming months and years but the risk/reward ratio related to ETH currently presents the best odds in my opinion.
Analyzing potential gains is equally as important as analyzing potential loss. The two go hand in hand and a project with a high possibility of extreme gains, that is matched by a low possibility of loss is your best bet! Ethereum seems to fit this description reasonably well in my opinion. My exposure to ETH is ultimately to increase my BTC holdings. When you examine ETH against the dollar, a 120% move from current levels will put ETH back at all time high levels. That is not much, considering Litecoin just did 45% in 7 days!
On the other hand, when compared against BTC, ETH would require a 450% move in order to reach all time high levels against BTC. The price of 1 ETH is currently 0.028 BTC, while the all time high price is approximately 0.15 BTC. Looking at the BTC value, ETH has not even begun to start moving yet.
It is not that I am simply expecting ETH to reach those levels again but rather that all the data is pointing towards it and beyond. A significant amount of ETH is currently removed from the market due to the introduction of staking. This is likely to slowly increase over time and will help in creating less supply for a growing asset.
When you study the on-chain analysis of ETH, there are a number of bullish factors that begin to become more evident. Despite the recent spike in gas fees, the daily transactions on the ETH network are more than double that of Bitcoin. Even when things don't exactly work out for Ethereum, the market remains faithful to back it. This is very important when it comes to the longevity of any project, or business for that matter.
The daily transactions on the Ethereum network have been steadily increasing on a consistent upward trajectory, despite even the bear market. There is just so much support for Ethereum and the idea that ETH will ultimately provide the base layer for so much of the new economy is very exciting. Provided, there is so much already built on ETH.
Polkadot will also have a significant part to play, as will perhaps even Cosmos. The fact that institutions are slowly warming up to the idea of ETH is also an early sign of the possibility of future significant investments from institutions into ETH.
As the BTC supply shrinks and demand grows, BTC will skyrocket to perhaps the point where investors will be looking for a new potential investment that can possibly match the past performance of BTC.
The Flippening?
There are those who also believe that ETH can actually flip BTC, to become the number 1 Crypto by market cap. This is a likely scenario that I am open to, rather than convinced of. The success of the Beacon chain also needs to be cemented, along with a couple of other confirmations that the market requires in order to lift ETH into a new domain.
Regardless of this possible outcome, it is clear that ETH is poised to have a massive 2021!
