For more than a decade, Ethereum (ETH +2.00%) has played second fiddle to Bitcoin (BTC +1.80%). Currently, Ethereum is just one-sixth the size of Bitcoin by market value and has much less name recognition among both retail and institutional investors.
But that could soon change. That’s because Ethereum is in the midst of a major overhaul that could propel it to stunning gains during the next decade, leaving Bitcoin investors envious.
A new Ethereum roadmap
For Ethereum to outperform Bitcoin over the long haul, there needs to be a major paradigm shift in how investors view it. And that’s exactly what could be coming soon.
Image source: Getty Images.
In July, Ethereum co-founder Vitalik Buterin released a new strategic roadmap through 2029 that includes some exciting new developments. The roadmap envisions a major overhaul of the core Ethereum blockchain, making it faster, easier to use, and more efficient. It will also prepare Ethereum for the quantum computing era and help to set up Ethereum for new advances in artificial intelligence (AI).
All told, says Buterin, this will be the biggest overhaul of Ethereum since The Merge in 2022. That could set Ethereum up for major gains during the next decade.
The emergence of ETH 2.0
It’s no surprise that crypto investors are already thinking big — really big — about the future of Ethereum. Top Wall Street strategist Tom Lee is calling this new paradigm shift “ETH 2.0.”
As part of this paradigm shift, Ethereum will become much more tightly integrated into the IT infrastructure of the financial world. In doing so, it will be able to tap into new pockets of growth in the blockchain and crypto world, including both stablecoins and real-world asset (RWA) tokenization.
If all goes according to plan, says Lee, “Ethereum will become money.” If that’s the case, then one of the likely losers will be Bitcoin. For years, Bitcoin bulls have talked up Bitcoin as the future of money. But what if it’s Ethereum, and not Bitcoin, that gets to the finish line first? If that’s the case, Lee says, Ethereum could skyrocket to a price of $250,000.
Admittedly, a lot needs to go right for this scenario to play out as planned. But it certainly helps that Ethereum is already a decentralized finance (DeFi) powerhouse. Competitors have had more than a decade to catch up, but Ethereum still ranks as the top DeFi blockchain on the planet, accounting for a staggering 55% of all Total Value Locked (TVL). For good reason, Lee refers to Ethereum as the preferred blockchain of Wall Street.
Ethereum’s historical performance
The performance of Ethereum over the past decade has been much more impressive than many people might think. Since 2017, Ethereum has grown at a compound annual growth rate (CAGR) of 18%. That’s along the lines of a fast-growing tech stock.
Today’s Change
(2.00%) $37.40
Current Price
$1,911.03
Key Data Points
Market Cap
Day’s Range
$1862.45 – $1924.94
52wk Range
$1512.07 – $4946.05
Volume
10.3B
The two big years for Ethereum were 2020-2021, during the heyday of the DeFi investing boom. In 2020, Ethereum skyrocketed in price by 472%, while Bitcoin returned 304%. In 2021, Ethereum skyrocketed by 395%, while Bitcoin returned 59%.
Thus, Ethereum has already shown the ability to outperform Bitcoin over short periods. Now it remains to be seen if it can maintain this level of outperformance for an entire decade.
What could possibly go wrong?
Of course, investors have a right to be skeptical about Ethereum. After all, the much-ballyhooed Merge in 2022 has had mixed results in boosting Ethereum’s price. Since 2022, Ethereum has underperformed Bitcoin.
And don’t forget — Tom Lee has a very good reason to talk up the prospects of ETH 2.0. As the chairman of Bitmine Immersion Technologies (BMNR -1.95%), the world’s biggest Ethereum treasury company, Tom Lee has a very clear economic incentive to push the price of Ethereum as high as possible. The higher it goes, the more valuable his company becomes.
And finally, competitors continue to take market share away from Ethereum. In many cases, they are faster and cheaper to use, making them more attractive to crypto investors.
So, obviously, there are a lot of question marks around Ethereum. It’s down 35% year to date for a reason. That being said, it remains the one altcoin most likely to outperform Bitcoin over the long haul. If you’re looking to diversify your crypto portfolio, Ethereum is definitely worth a closer look.