Ethereum's price has risen significantly on cryptocurrency exchanges this week – what's behind it and what factors should investors consider to decide whether Ethereum or its sibling Cardano is the better buy?
Ethereum celebrates its birthday on July 30. Ethereum was launched in 2015 to create a “world computer” with the same Web3 blockchain properties as Bitcoin, which stores cash and makes payments.
Cardano was launched via an Initial Coin Offering (ICO) on September 23, 2017, and was founded by Ethereum co-founder Charles Hoskinson. Currently, Cardano is the 10th largest cryptocurrency by market capitalization.
Ethereum market cap (May 22): $451.8 billion
Cardano market cap (May 22): $17.2 billion
Certain differences between the two cryptocurrencies are in favor of one or the other and are good reasons to be bullish or bearish on ETH or ADA tokens.
However, some of the differences between the two networks make trade-offs more complicated to evaluate as they may provide advantages for one cryptocurrency or the other. Here are seven key factors that will influence the future price of Ethereum versus Cardano:
1. ETH vs. ADA – Technical Analysis (Tie)
Ethereum price has almost returned to its ATH (all-time high) after surging this week on talk of an Ethereum spot ETF. Cardano still has a long way to go. Things could be more bullish for ADA as there is still room for price growth.
The recent approval of an Ethereum ETF will likely shake up the entire Ether investment meta. If bulls push the price above $4,000, it could see a further 12.5% surge in ETH to $4,500, which would put it within the prominent range of Ethereum’s previous all-time high of $4,721 in November 2021.
Forbes recently predicted that Ethereum could hit $5,000 by the end of 2024. Bitcoin ETF issuer VanEck predicts it could hit $11,800 by 2030. An even more bullish outlook sees ETH hitting $10,000 by the end of the year.
In the short term, Cardano’s technical indicators and weekly moving averages recommended a “sell” on Thursday, while Ethereum’s technical indicators recommended a “strong buy” over a seven-day period, according to data from Investing.com.
2. Ether Spot ETF – Regulatory Analysis (ETH Bullish)
There's no denying it, and Charles Hoskinson would surely agree: US regulators appear to favor Bitcoin and Ethereum over Cardano and other DeFi networks.
The SEC approved an Ethereum Futures ETF in October and made it clear that it does not consider Ether to be an unregistered security. However, U.S. regulators have classified Cardano and other cryptocurrencies as unregistered securities while ignoring Bitcoin and Ether in lawsuits against several blockchain companies.
“Furthermore, despite filing numerous lawsuits against cryptocurrency companies since April 2023, the agency has never cited Ethereum as collateral in its complaints,” Fortune magazine reported on May 1.
The SEC's lawsuit against Ripple has been years in the making (since December 2020) and has yet to be resolved. Litigation is costly, and the future of the currency is unclear as it is targeted by the government.
Markets hate uncertainty.
It may not be fair, but this is bullish for ETH and bearish for ADA.
3. ADA vs. ETH – Fundamental Analysis (Tie)
Fundamental analysis is the preferred method of investors who aren't completely corrupt. Instead of the technical analysis of charts or the voodoo economics of meme currencies, fundamentalists look at the investment outlook and ask themselves, what would Benjamin Graham, author of “The Intelligent Investor,” do if he were here?
Graham says:
“Smart investors are realists who sell to optimists and buy from pessimists. In the short term the market is a voting machine, but in the long term it is a weighing machine.”
If a company's future expected earnings, discounted to the present, exceed its current market value, it's likely a good investment. If its earnings are equal to or less than the company's market capitalization, it's likely a bad investment.
ADA: TVL: $263.8M (3% annual fee rate + 121% annual growth rate) / Market Cap: $16.4B
Ethereum $64.9B TVL (5.5% annual fee rate + 145% annual growth rate) / Market cap: $453B
Looking at the above data alone, Cardano appears to be the winner, as its inflows are a much smaller percentage of its market cap than Ethereum (0.019 vs. 0.22), but only if Cardano is expected to grow at the same rate as Ethereum in the future.
With the uneven institutional adoption on both sides, it will be difficult for Cardano to do so unless it finds a use case, features/benefits, and narrative that will shake up the crypto retail internet market.
4. Cardano vs. Ethereum – Gas Fees (Cat Game)
Cardano's fees are low and predictable, while Ethereum's higher fees are a feature, not necessarily a bug: it's safer because it's costly to exploit the network for unprofitable cybercrime, and large institutions prefer it that way.
This is one of the reasons why industry leader Bitcoin's slow, expensive network with low transaction bandwidth holds capital tightly. In many ways, these built-in costs qualify participants more than a know-your-customer policy would, automatically screening participants without discriminating on any criteria other than their ability and willingness to pay network fees.
Still, newcomers, entrepreneurs, startups, and investors starting out with small amounts of cash have an advantage over smart contract blockchain networks with low fees like Cardano. Transaction fees on both networks are highly volatile and spike during periods of heavy network usage.
5. Ease of Use – Cardano (also tied)
Some in the Web3 camp believe Ethereum has a usability problem: it has grown too large with layers of complexity that create a steep learning curve and potential security threats.
Blockchain advocate Daniel Corey wrote in a recent opinion piece for Blockworks:
“Ethereum is becoming a multi-layered lasagna-like system, with complexity and fees pushing people to their limits and raising interoperability and security concerns.”
Indeed, Ethereum’s complexity may be a reason to be bullish on ETH, just as Ethereum’s high transaction fees are. It may simply be evidence of the network’s success. As Cawrey acknowledges in his article, the network is beginning to realize the concept of a “world computer.”
Any computer architecture expert would be hard-pressed to explain how a Turing-complete global computer, available to anyone on a peer-to-peer network, could be anything other than a flying spaghetti monster of complexity.
6. Ether vs. Cardano Whales (ADA Bullish)
While a massive Kraken deposit of 15,000 Ethereum discovered by Whale Alert on May 18 signaled a possible Kraken bear market for Ethereum, the surge in whale-sized transactions following the SEC’s approval of a spot Ethereum ETF has been purely positive for the network, data from IntoTheBlock shows.
Meanwhile, Cardano whales have been very bullish on ADA in May. They increased their holdings of Cardano tokens by 11% in one month. This is definitely bullish for Cardano as whales tend to be smart investors with cutting edge analytics and market outlooks to know what they are doing.
https://x.com/intotheblock/status/1790774801277042863
7. Ethereum vs. Cardano Memes (ETH Bullish)
Meme coins are a clear advantage for Ethereum. Cardano has meme coins, but none of them are noteworthy or top the market cap charts like Ethereum's SHIB, PEPE, and FLOKI.
Cardano has succeeded in creating a simpler, lower-fee version of Ethereum, but the cryptocurrency market tends to reward projects that have meme karma attached to their technology. An NFT collection of Orange Pill Moon Boys or anything with dogs on it might do the trick.
