With the start of the new year, a significant transition is in progress within the cryptocurrency market. Fresh funds are moving away from Bitcoin [BTC], leaving investors uncertain following its recent decline. This state of affairs has put them on edge, unsure of what lies ahead.
Meanwhile, the ongoing turbulence in the macroeconomy, particularly worries about an impending debt crisis in the U.S., has sparked concerns about a repeat of the 2022 Bitcoin cycle.
Amidst this backdrop, Ethereum [ETH] is gaining considerable momentum, with its impressive track record capturing the attention of numerous investors.
As we approach Q1 and the market remains unpredictable, the question arises: will Bitcoin or Ethereum deliver the most robust returns? The time is now to assess your choices and determine where to invest.
Examining Ethereum/Bitcoin’s January upswing
Historical patterns indicate that Q1 tends to be a strong period for cryptocurrencies. While Bitcoin often dominates the headlines, Ethereum has consistently shown stronger price surges.
During mid-January, the ETH/BTC pair typically undergoes a sequence of bullish candlesticks, often signaling an influx of capital by February. This year, Ethereum surged by 85%, reaching $4,087 by mid-March.
However, it’s not just about the charts. The middle of January is also a crucial time for governments as they finalize their fiscal budgets. This year, the stakes are higher than ever.
With the new administration planning to address a colossal $7 trillion debt and implement spending cuts, the pressure is mounting. Coupled with the escalating debate on raising the debt ceiling, we are in for a tumultuous mix.
In essence, the government’s strategy for managing its debt could pave the way for more significant financial hurdles in the future.
Could Bitcoin emerge as a more secure option?
The current scenario is a high-stakes game. Bitcoin’s recent descent from its all-time high of $108K to $92K reflects a challenging market environment, prompting cautious behavior among investors.
Retail fear of missing out (FOMO) is currently subdued, unless a notable dip triggers a surge in buying activity. The onus is now on major players to induce a supply shortage.
With 2025 shaping up to be volatile, the verdict seems apparent: Bitcoin might not be the safest bet at this juncture.
Adding to the uncertainty is the decreasing control by Bitcoin’s long-term holders (LTH), which has dwindled to 62.31%. In contrast, Ethereum’s LTH dominance stands firm at 75.06%.
Bitcoin’s LTH percentage has been slipping since March, when BTC reached $73K, and this trend has persisted even post achieving new all-time highs.
Conversely, Ethereum has witnessed a consistent upward trend, with its LTH control expanding in sync with its surge to $4K. The message is clear: Ethereum’s long-term holders exhibit confidence and dedication.
This shift is pivotal for a fundamental reason: Retail investors frequently look to LTH metrics as an indicator of market sentiment. The growing LTH base of Ethereum serves as a robust indication of stability.
Considering Ethereum’s impressive historical performance in January and its strengthening support from long-term holders, it’s evident that Ethereum is primed to take the lead, potentially surpassing Bitcoin. However, the real driving force is yet to materialize. Stay vigilant during this critical period, as it could herald significant shifts and substantial opportunities for your investment portfolio.