A properly diversified BTC and ETH portfolio can see greater returns and less downside volatility than investing in Bitcoin alone, according to Hougan.
With spot Ethereum ETFs launching in the US, should investors currently holding Bitcoin ETFs split their crypto investments into ETH?
In a series of tweets on Thursday, Bitwise Chief Investment Officer Matt Hougan offered three reasons why this could be a good idea.
Why Bitcoin Holders Should Buy Ethereum
The first reason, Hougan writes, is for the sake of diversification. Since predicting the future of crypto is difficult, holding both leading assets can help investors avoid the risk of one asset losing value or taking over the other over time.
“Ask any investor from the dot-com bubble who bought AOL or Pets.com,” Hougan said. “They were right on the big picture—the Internet was going to be big!—but wrong on the details. So sad!"
![](https://public.bnbstatic.com/image/pgc/202406/c52fd9e9a4be85494b805fcf673e32e9.png)
At the time of writing, Bitcoin's market capitalization accounts for 55% of the entire crypto market, Ethereum accounts for 18.6%.
Although ETH has trended flat against Bitcoin over the past five years, its dominance over the leading cryptocurrency has gradually decreased since the merger in September 2022. However, the ETH/BTC ratio has received a boost following its approval to receive spot ETFs in the United States last month.
Second, Hougan argues that the fundamentally different nature of Bitcoin and Ethereum makes choosing between them difficult. While Bitcoin is optimized to be “better money,” Ethereum is designed for “programmable money” that enables blockchain applications like stablecoins and DeFi.
“Adding a little bit of ETH to what is essentially BTC will give you broader exposure to all that public blockchains can do,” he said.
BTC and ETH work best together
Ultimately, Hougan argues that the historical performance of both assets shows they perform best when balanced together in a portfolio.
For example, a “traditional” 60/40 portfolio with a 5% crypto allocation has had higher cumulative returns over the past four years than when allocated 70/30 between BTC and ETH (56.32%) compared to only allocating to BTC (54.49%).
Interestingly, it had an even lower “max drawdown” than the BTC-only portfolio during that time, dropping only 25.19% at its peak compared to 25.35%.
However, Hougan said there is still one main reason why investors may want to invest only in BTC.
“It is very possible that Bitcoin is the dominant new form of “money” to emerge in crypto,” Hougan said, citing its huge existing lead and community orientation over this market.
“Money is a huge market. There is a lot of space for BTC to grow if it is successful,” he said.
Source: https://tapchibitcoin.io/3-ly-do-when-holder-bitcoin-nen-mua-vao-ethereum-theo-giam-doc-bitwise.html