Should You Invest In Ethereum / Bitcoin?

1. Long-term investors: The cryptocurrency market is highly volatile, however, it also displays long-term trends. Investors who believe they can predict the long-term relationship between Ethereum and Bitcoin could use the ETHBTC instrument as a long-term investment option.

2. Day traders: High volatility in the crypto market is quite common, and cryptos have been known to show great price swings over the course of a single day. Traders can try and take advantage of these movements in an attempt to generate short-term profits.

3. Cryptocurrency traders: While often bought and sold using fiat currencies, cryptocurrencies could also be purchased using other cryptos. Therefore, crypto traders who wish to diversify their portfolios and explore new ways of crypto trading could add this instrument to their portfolios.

4. Blockchain enthusiasts: Bitcoin was the world’s first large-scale project involving blockchain and Ethereum was the first platform that enabled developers to create their own blockchain apps. While both are blockchain networks, it is possible that occurrences within the blockchain space will have a higher impact on one side of the pair over the other.

The ETH/BTC pair is a unique financial instrument, since it pins two cryptocurrencies against each other. These cryptocurrencies could be impacted by similar factors, making their prices move in tandem. However, there are a number of factors that could impact one crypto more than it would the other, such as:

1. Traditional financial institutions: Whenever the discussion arises regarding the inclusion of cryptocurrencies in mainstream financial markets, the spotlight is almost always on Bitcoin - since it is the first, and perhaps the most well-known, cryptocurrency. Therefore, news regarding the inclusion (or exclusion) of cryptos within a traditional financial construct could often impact Bitcoin prices before other cryptocurrencies.

2. Adoption of blockchain technology: Both Bitcoin and Ethereum are blockchain based, so it stands to reason that if adopted by mainstream high tech companies, it would benefit both cryptos. However, since Ethereum is the only one of the two that offers a wide array of potential blockchain applications, such an occurrence could have a more positive impact on Ethereum than on Bitcoin.

3. Crypto-specific news: While both cryptos could be impacted in a similar way by various trends within the crypto market, there are other instances in which one could be more affected than the other. For example, if a news report suggests that one of the cryptos is more vulnerable to attacks than the other, it would most likely cause that crypto to lose strength against its peers.

4. Regulatory issues: Most major cryptocurrency markets around the world either have, or are in the process of creating, regulations for cryptocurrency trading. Since regulations could impact different cryptos in different ways, it is possible that a new regulation in a major market could benefit one crypto while hindering the other.

There are different forces in the market that are trying to promote cryptos. Other than the creators of the cryptocurrencies themselves, there are other bodies that are strongly in favor of certain cryptos. Both Bitcoin and Ethereum have powerful allies, who are trying to promote their status within mainstream industries.Two examples are:

• The Winklevoss twins: Made famous due to their involvement in the early stages of Facebook (dramatised by their portrayal by actor Armie Hammer in the movie “The Social Network”), Tyler and Cameron Winklevoss are strong advocates of Bitcoin. The two have greatly grown their wealth through Bitcoin investments and are actively trying to expose it to new markets. Most notably, the two created a Bitcoin-based ETF and submitted it for review by the American SEC. Much to their dismay, the SEC has repeatedly rejected such instruments - but it is likely the two brothers will continue and try to introduce them into mainstream markets.

• Enterprise Ethereum Alliance: Ethereum enjoys the support of numerous well-known tech and financial companies, wanting to promote the use of the platform as the go-to infrastructure for creating blockchain technology. With names such as Microsoft, BP, Intel and Ernst and Young among the Alliance’s 500 members, Ethereum has received the seal of approval from some of the giants of the global economy.