Is Cardano or Ethereum a Better Investment in 2024?

Markets got a big spike in Ethereum price this week on crypto exchanges. What’s behind it and what factors can investors take into consideration to determine whether Ether or its friend Cardano is the better buy?

Ethereum has a birthday coming up on July 30. It was launched in 2015 to create a “world computer” with the same Web3 blockchain properties as Bitcoin has for storing cash and making payments.

Cardano was launched on September 23, 2017 by initial coin offering (ICO) and founded by an Ethereum co-founder, Charles Hoskinson. Today it’s 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 an advantage for one or the other and a good reason to be bullish or bearish for ETH or ADA tokens.

But some of the two networks’ differences are tradeoffs that are more complex to evaluate as yielding an advantage for either crypto. Here are 7 key factors at play in the future Ethereum price against Cardano:

1. ETH vs. ADA – Technical Analysis (a tie)

Ethereum price is nearly all the way back to its ATH (all time high) after spiking this week on Ethereum spot ETF buzz. Cardano has a long way to go. That might actually be more bullish for ADA, with more upside left in its price.

The recent Ethereum ETF approval will shake up the entire meta for investing in Ether. If bulls take the price past $4,000, another 12.5% increase would pump ETH to $4,500— within striking range of the previous Ethereum ATH of $4,721 in Nov. 2021.

Forbes recently mentioned an Ethereum price prediction of $5,000 by the end of 2024. Bitcoin ETF issuer VanEck predicts $11,800 by 2030. An even more bullish outlook forecasts $10,000 ETH by the end of the year.

Over the short term, Cardano technical indicators and moving averages over the weekly span recommended “Sell” on Thursday. Meanwhile, Ethereum technical indicators for the seven-day span recommended “Strong Buy,” according to data from Investing.com.

2. Ether Spot ETF – Regulatory Analysis (bullish ETH)

There’s no denying it. Charles Hoskinson would certainly agree: U.S. regulators seem to favor Bitcoin and Ethereum over Cardano and other DeFi networks.

The SEC said okay to Ethereum futures ETFs in October, revealing it didn’t seem to think of Ether as an unregistered security. However, the U.S. regulator has classified Cardano and other cryptocurrencies as unregistered securities in lawsuits against multiple blockchain companies, while ignoring Bitcoin and Ether.

As Fortune Magazine reported on May 1, “Furthermore, despite launching a number of lawsuits against crypto companies since April 2023, the agency has never named Ether to be a security in its complaints.”

The SEC lawsuit against Ripple has taken years (since Dec. 2020) and still has not yet been resolved. It is costly and leaves the future unsure for the currencies under the government’s crosshairs.

Markets abhor uncertainty.

It may not be fair, but it’s a bullish factor for ETH and bearish for ADA.

3. ADA vs. ETH – Fundamental Analysis (a wash)

Fundamental analysis is the preferred method of investors who are not total degenerates. Instead of chart technical analysis or meme currency voodoo economics, the fundamentalist looks at an investment prospect and asks what would “The Intelligent Investor” author Benjamin Graham do if he were here?

Graham says:

“The intelligent investor is a realist who sells to optimists and buys from pessimists. In the short run, the market is a voting machine but in the long run, it is a weighing machine.”

If a business’s expected future revenues discounted to the present day exceed its current market value, then it may be a good investment. If they match or fall short of the business’s market cap, then it may be a poor investment.

ADA: $263.8 million TVL (3% annual reward rate + 121% annual growth rate) / Market Cap: $16.4 Billion
ETH $64.9 Billion TVL (5.5% annual reward rate + 145% annual growth rate) / Market Cap: $453 Billion

Going by the data above without any further context, it appears Cardano would be the winner, because its inflows make up a much smaller portion of its market cap than Ethereum (0.019 to 0.22), but only if we expect it to grow at the same rate as Ethereum in the future.

The lopsided institutional adoption between the two will make that difficult for Cardano unless it finds a use case, a feature/benefit, and a narrative that shakes up the retail Internet markets for cryptocurrency.

4. Cardano vs. Ethereum – Gas Fees (cat’s game)

There are lower and more predictable fees on Cardano, but higher fees on Ethereum are also a feature, not necessarily a bug. They make it more expensive to misuse the network for cybercrime that doesn’t pay, so it’s more secure. Big institutions like that.

That’s one reason why the industry leader, Bitcoin’s slow, expensive network, with a low transaction bandwidth holds its capital so well. In many ways these built-in costs qualify participants better than Know Your Customer policies and automatically and without discriminating on any basis other than ability and willingness to pay the network’s fees.

Still for newcomers, enterpreneurs, startups, and investors starting out with a smaller cash pile, smart contract blockchain networks with lower fees like Cardano have an advantage. Transaction fees on both networks are highly variable and spike during periods of high network use.

5. Ease Of Use – Cardano (another tie)

Some people in Web3 feel Ethereum has an ease-of-use problem. It’s become too overgrown with complicated, byzantine layers on top of layers, creating a steeper learning curve and potential security threats.

Blockchain advocate Daniel Cawrey wrote in a recent opinion article on Blockworks:

“Ethereum is becoming a multilayered lasagna-like system whereby complexity and fees are pushing people to the margins, causing interoperability and security concerns.”

While true, much like Ethereum’s higher transactions fees— the complexity of Ethereum may be a reason to be bullish for ETH. It could simply be proof of the network’s success. As Cawrey acknowledges in the piece, the network is beginning to achieve its “world computer” concept.

Any computer architecture expert would be hard-pressed to explain how a Turing-complete global computer that anyone can use on a peer-to-peer network would become anything but a flying spaghetti monster of complexity.

6. Ether vs. Cardano Whales (bullish ADA)

A massive 15,000 ETH whale deposit to Kraken on May 18 spotted by Whale Alert suggested a bear run on Ether by whales could be incoming, but after the SEC approved the spot Ethereum ETF a surge in whale-sized transactions has been net positive for the network, according to IntoTheBlock data.

Meanwhile, Cardano whales have been extremely bullish for ADA in May. They boosted holdings in Cardano tokens by 11% in a month. Whales tend to be smart money with some of the most advanced analytics and market outlooks to know what they’re doing, so that’s positively bullish for Cardano.

https://x.com/intotheblock/status/1790774801277042863

7. Ethereum vs. Cardano Memes (bullish ETH)

Meme coins are a definite advantage for Ethereum. While Cardano does have meme coins, none of them are notable and they have not topped the market cap charts like Ethereum’s SHIB, PEPE, and FLOKI.

Cardano has succeeded in making a simpler, lower-fee Ethereum, but crypto markets tend to reward projects that leaven their technology with some meme karma. Maybe an Orange Pill Moon Boys NFT collection or something with a dog on it would do the trick.