Thread by @cburniske

When $BTC rallies, trolls point and laugh at $ETH.

When $ETH rallies, trolls point and laugh at $BTC.

But both miss the point: $BTC & $ETH feed into each other.

Been watching this dynamic play out since Q1 2016.

$BTC rises relative to $ETH? That means more $ETH can be bought with each $BTC...typically leading to an $ETH that rises in USD and BTC-terms, once $BTC pauses.

Since $ETH is more illiquid & higher risk than $BTC, it tends to overshoot $BTC's gains in a bull market, ultimately ending up higher than it started in $ETHBTC terms...

...then allowing more $BTC to be bought with $ETH, and so the cycle continues.

To better grok the impact of (il)liquidity and law-of-large-numbers, consider that in the last mini #bitcoin-rally, $BTC added ~$40B in network value, more than $ETH's current total ~$35B network value: blockchain.com/charts/market-…

Some may point out that in 1H 2019 & again recently, $ETH led $BTC.

I think this has less to do w/ liquidity mechanics, and more to do w/ $ETH drumming up interest in crypto that overflows into $BTC.

Once a bull-cycle gets going, the above feedback loop is definitely in play.

In many ways, #Ethereum is proving out many of the promises that were made early-on in #Bitcoin days, but never executed upon because it's tough to build on Bitcoin.

Regardless of what you believe in, all rise in USD with this dynamic.

The same dynamic occurs between $ETH and ERC-20s, too.

The $30B+ in assets that use #Ethereum for creation, custody, and transfer, are almost all priced in $ETH.

That means that as they grow in value, as we saw with the #DeFi boom, these assets can also purchase more $ETH.

More broadly, we also see this sloshing of capital between $BTC and non-BTC/non-ETH #cryptoassets through uptrends, as described in May 2019 👇

https://twitter.com/cburniske/status/1126672148293091333?s=20

A lot has changed even since May 2019. Most importantly, there are dozens of high-quality #cryptoassets in the market that have better fundamentals and well-understood means of accruing value: placeholder.vc/blog/2019/4/26…

"Sloshing" can drive short-term price action, but fundamentals drive long-term value creation.

While the above dynamics are interesting and helpful in a bull-cycle, they can also bite-back hard in a bear-cycle.

So spend most of your time on fundamentals and long-term value 🙂

*assuming the ERC-20s grow in USD-terms faster than ETH does. The quality ones tend to do so in a bull market, in other words:

ERC-20s are to ETH, what ETH is to BTC.

While I'm here, is there a site that shows real-time metrics of the value of all tokens built atop #Ethereum?

This was despite $ETH having a larger move (~33%), and $BTC having a smaller move (~10%).