Observers are closely monitoring the record-breaking investments pouring into spot bitcoin exchange-traded funds (ETFs), as assets under management (AUM) have surpassed $55 billion, with bitcoin achieving a status even larger than silver. Alex Tapscott, the author of Web3: Mapping the Internet's Upcoming Economic and Cultural Frontier, outlines that while bitcoin garners significant attention, Ether, the second-largest cryptocurrency by market capitalization, is progressing and comes with distinct investment considerations.

The Argument for Bitcoin's Resilience Strengthens, Alongside Ethereum's Appeal
Bitcoin recently surged past $70,000, breaching new historic highs, fueled by immense and seemingly insatiable interest from investors in the latest U.S.-listed spot bitcoin ETFs, marking one of the most successful launches in history. These ETFs have managed to accumulate over $10 billion in net inflows in less than two months, a pace unmatched by Gold ETFs which took two years and S&P 500 ETFs which required three years to reach a similar milestone. The impending Bitcoin halving, less than two months away, hints at an imminent supply shock. Bitcoin halving occurs every four years, reducing the production of new bitcoins distributed to miners for securing the Bitcoin blockchain. Historically, each prior halving event has been followed by a new all-time high for bitcoin.

Despite the promising prospects emanating from Bitcoin's ETF flows and approaching halving, Ethereum, the subsequent most sizeable crypto asset in terms of market capitalization, has an argument of its own. While bitcoin is often characterized as a storage of value, a medium of exchange, or both—essentially, digital currency for the internet—Ethereum operates as a platform for developers constructing over 4,500 applications fostering sectors as diverse as art and collectibles (NFTs), traditional finance products, and real-world assets, in addition to supporting internet-native organizations known as DAOs, encapsulating what is collectively known as Web3.

Wall Street is steadily recognizing Ethereum's potential, as evidenced by Bernstein's recent research report forecasting a substantial resurgence for decentralized finance (DeFi), underlining a promising future for blockchain finance. The expanding adoption of Web3 among enterprises is further reflected in the fact that 52% of Fortune 100 companies initiated blockchain-related endeavors since 2020. Several catalysts could propel Ethereum towards historic highs, potentially surpassing bitcoin:

1. Reduction in Ethereum's supply by 430,000 ETH since September 2022, equivalent to $1.7 billion at current valuations, in contrast with bitcoin's supply growth of 490,000 BTC ($35 billion) during the same period. Ethereum implements a mechanism where user fees are directed towards retiring or "burning" tokens, enhancing deflationary effects as network activity intensifies.

2. Recent major network enhancements within Ethereum improving its scalability woes, a notable drawback that opened opportunities for competitors like Solana. These upgrades aim to optimize Ethereum's scalability potential, boosting throughput, and lowering transaction costs to solidify its competitive edge.
3. The potential emergence of an Ethereum ETF around May this year, with the final SEC decision deadline set for May 23 concerning VanEck and ARK 21Shares applications. The trading dynamics of Grayscale's closed-end Ethereum Trust (ETHE) indicate growing confidence in ETF approval, with analysts forecasting a likely approval, reflecting positive market sentiment regarding an ETF for Ethereum.

In Conclusion:
Bitcoin and Ethereum have long stood as frontrunners in the cryptocurrency domain. Historical cycles have shown Ethereum gaining strength relative to bitcoin, hitting highs of 0.15 and 0.09 ETH per BTC in 2017 and 2021, respectively. The current ratio of 0.056 sits marginally above its 3-year low. Speculatively, assuming a hypothetical $100,000 target for bitcoin, Ethereum could reach $14,750 considering the metric highs from 2017, and $8,800 based on the 2021 peak.