Ethereum (ETH) has shown a remarkable recovery after months of steep declines, prompting investors to reconsider diversification strategies beyond Bitcoin. ETF issuer Bitwise's founder Matt Hougan draws parallels with early internet investing to provide actionable insights.
Ethereum's Resurgence: Signs of Recovery
After plummeting nearly 60% from its peak, Ethereum has rebounded sharply with:
- 53% growth since April 12 lows
- 37% surge in the past week alone
Key drivers include:
✔ Successful blockchain network upgrades
✔ Broader market risk appetite shifts
✔ Growing institutional interest in altcoins
Bitcoin vs. Altcoins: The Strategic Choice
Bitcoin's unique position:
- The "digital gold" standard
- Highest liquidity and adoption
- Singular focus on monetary utility
Why consider diversification?
Hougan argues most portfolios should include other crypto assets, comparing blockchain's potential to the internet's evolution:
"Like the web revolutionized multiple industries, blockchain extends far beyond currency applications."
Historical Lesson: 2004 Internet Investments
- Google dominated search (6,309% returns since 2004)
- But vertical leaders like Amazon (+3,287%) and Netflix (+39,900%) outperformed in their niches
Blockchain as a Multi-Use Technology
Beyond Bitcoin's monetary use case, blockchain enables:
- Programmable networks (Ethereum, Solana, Avalanche)
- Decentralized applications (DeFi, DePin)
- Middleware services (Chainlink)
- Support infrastructure (Coinbase, Circle)
Investment Framework
Hougan's decision matrix:
| Scenario | Recommended Approach |
|---|---|
| Believing blockchain is primarily "anti-fiat hedge" | 100% Bitcoin |
| Viewing blockchain as general-purpose tech | Diversified basket (BTC + ETH + SOL + LINK) |
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FAQs
Q: Is Ethereum a better investment than Bitcoin now?
A: Not necessarily "better"—they serve different purposes. Ethereum offers smart contract functionality while Bitcoin remains the store-of-value leader.
Q: How much of my crypto portfolio should be altcoins?
A: Experts typically recommend 10-30% allocation to select altcoins for diversified exposure.
Q: What are the biggest risks with altcoin investing?
A: Higher volatility, lower liquidity, and regulatory uncertainty compared to Bitcoin.
Risk Warning: Crypto investments carry substantial risk of capital loss. Prices are extremely volatile—only invest what you can afford to lose.