After 3 full years in full “BTC maxi” mode, I’ve decided to allocate 5% of my “Forever Portfolio” to ETH. In this post, I explain why.

My “Forever Portfolio” is my main crypto portfolio (90% of my crypto). As the name suggests, these are assets I plan to hold forever. The crown jewels. If needed I will use them as collateral for a loan, but the plan is to never sell. Until recently my Forever Portfolio was composed exclusively of BTC.

Why I added ETH

  • Move to Proof-of-Stake
  • Change

Why EIP 1559 is a game-changer

Move from Proof-of-Work to Proof-of-Stake (PoS) means the network does not continuously leak out value to miners who have to sell ETH to pay their costs (equipment, electricity) in fiat.

Instead PoS rewards the owners of ETH who stake. Staking encourages holding on to ETH which reduces sell pressure and

To summarise, the move to PoS h

  • Creates negative supply inflation, similar to a stock-buy-back (less supply = token appreciation)
  • Eliminates need form miners that are compulsory sellers (=reduction in sell pressure)
  • Encourages ETH holders to hold their coins to earn staking yield (= reduction in sell pressure)
  • Allows ETH to market itself as “cleaner” that BTC due lower energy consumption of PoS vs PoW

In the medium-term ETH has potential to eat into BTC’s “store of value” narrative

  • Bitcoin unit bias plays against it: even if not rational, many investors like cheaper coins, they feel like there is more upside
  • Many investors feel they have “missed the boat” with BTC and believe there is more upside on alts
  • Proponents of ETH claim its Total Addressable Market (TAM) is bigger than BTC. If BTC is gold 2.0, the upper bound of its market cap is $10T. ETH’s marketing as a SoV and a world computer and smart-contract platform allows it to claim infinite
  • Recent boom in stablecoin usage, NFTs and Defi have shed light on ETH product-market-fit

Limitations of ETH

  • Move to ETH 2.0 not done yet. Lots of technical issues. Could never happen.
  • ETH is less decentralised than BTC
  • The monetary policy can be changed, unlike bitcoin’s

Medium-term drivers

Strong on-chain fundamentals

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