Bitcoin vs. Ethereum: Which crypto is the better 2021 investment?

Bitcoin vs. Ethereum: Which crypto is the better 2021 investment?

TipRanks

Online betting is increasingly being legalized in the United States after the U.S. Supreme Court struck down the Professional and Amateur Sports Protection Act 2 (PASPA) three years back. This year, according to a FinancialBuzz report, 19 U.S. states are expected to decide on the legalization of sports betting which could significantly benefit online sports betting companies. Using the TipRanks Stock Comparison tool, we will compare two online betting companies, DraftKings and Penn National Gaming, and see how Wall Street analysts feel about these stocks. DraftKings (DKNG) DraftKings is an online sports gaming and entertainment company that provides its users with a sports betting Sportsbook, daily fantasy sports, and online casino gaming opportunities. Last week, DKNG reported first-quarter revenues of $312 million, a jump of 253% year-on-year. Revenue was up 175% year-on-year after giving pro-forma effect to the company’s acquisition of Diamond Eagle Acquisition Corp and SBTech Global Ltd that was completed on April 23 last year. However, the company’s losses widened to $346.3 million in Q1 versus a loss of $68.7 million in the same quarter last year. DraftKings’ Chief Financial Officer, Jason Park said, “Our $312 million in first quarter revenue, 114% increase in MUPs [monthly unique payers] and 48% growth in ARPMUP [Average Revenue per MUP] reflect solid customer acquisition and retention as well as successful launches of mobile sports betting and iGaming in new states. We are raising our revenue outlook for 2021 due to the outperformance of our core business in the first quarter and our expectation for continued healthy growth.” The company has raised its financial outlook for FY21 and expects revenues to land between $1.05 billion and $1.15 billion versus earlier forecasts of between $900 million and $1 billion. This indicates year-on-year growth of between 63% and 79%. The upgraded guidance is a result of DKNG’s strong activation of its user base due to effective marketing, the launch of mobile sports betting in Michigan and Virginia, and iGaming in Michigan. The fiscal outlook also assumes that all professional and college sports events take place as scheduled, and DKNG continues to operate in the U.S. states in which online sports betting is currently live. DraftKings' online sports betting is live in 12 U.S. states at present. That represent 25% of the U.S. population. The company’s Co-Founder, CEO, and Chairman, Jason Robins said on the earnings call, “We believe the outlook for further legalization is very promising. In 2021, more than 20 state legislatures have introduced legislation to legalize online sports betting.” The company anticipates both its monthly unique payers (MUP) and average revenue per MUPs (ARPMUP) to increase in FY21 with MUPs growing at a higher rate than ARPMUP. DKNG also gave a quarterly revenue breakup for FY21 and expects Q1 revenue to represent 28% of FY21 total revenue while second-quarter revenue is forecast to account for slightly higher than 20%. Q3 revenue is expected to represent slightly less than 20% of the full-year revenue, with fourth quarter revenue likely to account for 30%. The company anticipates higher sales and marketing spend in FY21 than FY20 as it has become the official sports betting partner of the National Football League (NFL). DraftKings also gave some color regarding its adjusted loss before interest, taxes, depreciation, and amortization for FY21 and expects it to be the deepest in Q3 due to higher sales and marketing spend as the NFL season kicks-off with “three states in their first full NFL season”. (See DraftKings stock analysis on TipRanks) Yesterday, Northland Securities analyst Greg Gibas reiterated a Buy and a price target of $70 on the stock. Gibas commented on DKNG’s Q1 results, “DKNG reported strong Q1 results featuring revenue growth that was well ahead of consensus, accompanied by solid 2021 guidance upside. Top-line growth was driven by better than expected user activation (MUPs) following the well-executed launches in Michigan and Virginia, as well as overall strong unique payer retention and acquisition across DFS [daily fantasy sports platform], SB [sportsbook], & iG [iGaming] offerings.” Shares of DKNG have plunged 23.5% in the past month. Overall, consensus among analysts is a Moderate Buy based on 17 Buys and 6 Holds. The average analyst price target of $70.86 indicates upside potential of around 59.2% from current levels. Penn National Gaming (PENN) Penn National Gaming has ownership interests in or owns and operates 41 racing and gaming properties across 19 states in the United States. The company offers online sports betting in Mississippi, Pennsylvania, Colorado, Illinois, Indiana, Iowa, Michigan, and West Virginia. Last year, PENN acquired a 36% stake in Barstool Sports, a digital media company for $163 million. Since then, the company has launched its Barstool Sportsbook app and products in the states of Illinois, Michigan, and Pennsylvania. PENN also operates online sports betting in the states of West Virginia, Iowa, Indiana, and Pennsylvania through strategic partnerships and has an interactive gaming division through its subsidiary, Penn Interactive Ventures, that has launched iCasino in Pennsylvania and Michigan. Last week, the company reported its first-quarter results with revenues of $1,274.9 million, down 6% compared to pro-forma results from the first quarter of 2019, while adjusted EBITDAR was up 7% to $447 million. Jay Snowden, President, and Chief Executive Officer stated, “We remain focused on garnering top-three gaming revenue market share for the Barstool Sportsbook and driving best in class profitability. Since launching our product just over seven months ago, we have registered more than 400,000 customers and generated over $660 million and $61 million in handle and gaming revenue, respectively. We plan for the online Barstool Sportsbook to be live in eight states by football season and in at least 10 states before the end of the year.” PENN intends to open or rebrand six more retail sportsbooks by the end of this year. The company is also looking at increasing cross-selling opportunities through its mychoice mobile app that was launched last quarter. According to the company, the app has been downloaded 333,000 times with monthly active users of approximately 115,000. The company stated that the app allows for more meaningful user engagement, provides for targeted marketing, and is a key driver of growth in revenues. (See Penn National Gaming stock analysis on TipRanks) Following the Q1 earnings on May 6, Deutsche Bank analyst Carlo Santarelli reiterated a Sell with a price target of $31 on the stock. Santarelli said in a research note to investors, “PENN’s 1Q21 net revenue was $55 mm ahead of our forecast, though adjusted EBITDAR was relatively in line, coming in 1% ahead of our estimate ($447 mm versus our $442 mm estimate), as margins fell 120 bps shy of our forecast. The South and Midwest regions drove upside to our estimate, though this was largely offset by higher other segment (corporate/interactive/OSB) losses.” “Given peer reports, we don’t find the upside to Consensus to be overly surprising to many, and as such, we think the stock reaction will likely be more tied to the equity market direction…Management noted that spend per visit remains considerably higher than preCOVID levels, while visitation has returned to near pre-COVID levels as the 55+ customer has been returning,” Santarelli added. Shares of PENN have plunged by almost 21% in the past month. Overall, consensus among analysts is a Moderate Buy based on 6 Buys, 1 Hold, and 1 Sell. The average analyst price target of $116.57 indicates upside potential of around 45.4% from current levels. Bottom Line The rising legalization of online sports betting in the United States could benefit both DKNG and PENN as it could offer significant revenue-generating opportunities for the companies. While currently, both stocks appear to indicate significant upside potential over the next 12 months, analysts seem to be more bullish on DKNG’s long-term growth prospects.

Crypto Fundamentals: The Top 3 Cryptocurrencies Explained

Bitcoin, Ethereum, Dogecoin, Tether, Polkadot. With so many crypto assets grabbing headlines these days, it can be hard to keep them all straight.

Here we break down the top 3 cryptocurrencies by market capitalization, as reported by CoinMarketCap, as of the time of writing.

What the Top Cryptocurrencies Have In Common

To best understand the differences between cryptocurrencies, it is easiest to start with what they have in common.

Each crypto asset is basically computer code. It works by utilizing a private key, compromised of a string of random numbers and letters, that unlocks a virtual vault with your assets in them, whether cryptocurrencies, NFTs, or anything else that the particular blockchain is configured for.

These private keys are tracked on a blockchain, which is essentially a virtual ledger that records every transaction that has ever happened: Person A gives one Bitcoin to person B, who gives it to person C, ad infinitum.

For cryptocurrencies like Bitcoin, that blockchain is used to track a digitized, decentralized payment network. Recording and verifying transactions requires the computational power of a specialized computer or computer network known as a “mining rig.”

Bitcoin

Bitcoin (BTC) was the first cryptocurrency to debut, and it remains by far the largest and most widely traded. Its current market cap is over $1 trillion.

The concept first appeared in a white paper in 2009 by an individual (or individuals) under the pseudonym Satoshi Nakamoto.

When Bitcoin was created, a 21 million coin limit was implemented, ensuring scarcity and protecting against inflation, and for every 210,000 transactions mined, the reward for verifying new Bitcoin transactions is cut in half.

See also: The Race to the First Bitcoin ETF

Bitcoin is one of the few cryptocurrencies accepted as payment by companies such as Paypal, Microsoft, AT&T, and Tesla, with Bitcoin being most widely accepted as an alternative form of payment. Its biggest competitor at present is Ethereum.

Ethereum

Ethereum (ETH) is the second most widely traded cryptocurrency, with a market capitalization of $459 billion.

The Ether token that is carried by the Ethereum network is traded similarly to Bitcoin, but that’s where the similarity ends.

Ethereum it is not solely a cryptocurrency like Bitcoin. It is also a “smart contract” platform, which hosts programs that can run using the Ethereum blockchain. These programs can in turn send transactions over the blockchain, allowing for a marketplace of decentralized apps.

As such, Ethereum has fast become synonymous with “DeFi” or decentralized finance, a digital space where the crypto economy thrives. Investors can buy, sell, and trade on the Ethereum network.

Unlike Bitcoin, Ether currently has no supply cap.

Binance Coin

Binance Coin (BNB) was introduced in 2017 by Binance, the world’s largest crypto exchange. Binance Coin currently has a market capitalization of $101 billion.

First introduced as an Ethereum-based token, it was later moved to its own blockchain known as the Binance Chain Blockchain.

As such, Binance Coin is an incentivized method of payment within the Binance network: the crypto exchange offers a rebate for Binance Coin for signing up for membership.

The crypto asset is primarily utilized within the Binance exchange as an alternative way to pay fees incurred when trading on the exchange.

Binance Coin caps its supply at 200 million tokens. Binance plans to burn half this supply over time to combat depreciation of the token.

For more news, information, and strategy, visit the Crypto Channel.

Bitcoin or Ether: Which Crypto Is a Better Investment?

In almost every new industry, we have a ferocious rivalry: Microsoft vs. Apple, Uber vs Lyft, or Pepsi vs. Coke. And cryptocurrency is no exception.

Bitcoin (BTC) has the first-mover advantage and is the “face of cryptocurrency.” For many years, crypto never had a serious contender to compete with Bitcoin. Bitcoin held about 90% of the crypto market value in 2013, but the competition is heating up now.

It all started when a 20-year-old Russian-Canadian named Vitalik Buterin won a grant of $100,000 from the Thiel Fellowship. As a result, he dropped out of college and launched a platform that allows app development on the blockchain known as a “daap.” This platform is now called Ethereum (ETH). Ethereum shot up to become a serious competitor, and in only five months, captured a big chunk of the market share in cryptocurrency.

Here are the current market shares between these behemoth cryptos.

January 2021: Bitcoin held roughly 68% of the market cap versus Ethereum’s 10%

Bitcoin held roughly 68% of the market cap versus Ethereum’s 10% May 2021: Bitcoin held 42% versus Ethereum’s 19%

Three Key Differences Between Bitcoin and Ethereum

Keep in mind, Bitcoin and Ethereum are different. Ethereum wasn’t originally created to compete against Bitcoin. Rather, it was designed as a De-Fi platform. Almost by accident, the popularity of its platform drove Ethereum’s coin (Ether) to become the 2nd largest cryptocurrency in the world. Here are three key differences between both coins:

#1: Currency vs. Platform. Bitcoin established itself as a credible alternative to traditional fiat currencies. So, Bitcoin is a pure cryptocurrency that focuses primarily as a medium of exchange and a store of value.

On the other hand, Ethereum is built as a platform to run programmatic contracts and applications via its own currency: “Ether is a blockchain platform that functions like the Apple store or Android app store. Bitcoin is a commodity like gold, or a store of value,” said Pat LaVecchia, chief executive officer of Oasis Pro Markets.

#2: Security vs. Speed. Bitcoin is far slower than Ethereum in two key metrics:

42x Longer To Release Blocks. Ethereum block times are currently at about 14 seconds, compared to Bitcoin’s 10 minutes.

Ethereum block times are currently at about 14 seconds, compared to Bitcoin’s 10 minutes. 8x Slower Than Ethereum. A bitcoin transaction will show up in about 40 minutes, while it takes Ether about 5 minutes to complete a transaction.

Now, why is Bitcoin so slow? Well, security is Bitcoin’s first priority, and it is secure due to its coding language. Bitcoin uses C++ programming and is restricted to only 70 specific commands. This limitation makes it more difficult to hack the blockchain within these set commands. Ethereum is an evolving platform that is still finding its identity. For example, Ethereum 2.0 is expected to release this summer and will have completely different rule sets.

#3: Finite Supply vs. Infinite Supply. Bitcoin has a finite supply of 21,000. Once the supply is exhausted, that’s it. That’s why investors consider bitcoin as a store of value and investment against inflation. Contrary to Bitcoin, Ethereum offers an unlimited number of Ether but does cap the amount released each year.

The Case for Ether

Some investors love Ethereum because its platform is evolving to adapt to the current needs. If you invest in Ether, you’re betting on the future of its blockchain platform. Phil Bonello, director of research at Grayscale Investments, said: “Investors often look at Ethereum as a growth-type investment, making a bet on the continued development of the decentralized ecosystem built on Ethereum.”

Have you heard of NFTs? Of course, you do. Beeple auctioned off his NFT art, called “Everydays: The First 5000 Days,” for a mind-boggling $69 million. And where was the NFT hosted at? You guessed it. Ethereum is the blockchain that hosts NFTs like Beeple’s arts. What’s more, the record-setting NFT art was paid in Ether. NFT is just one example of Ethereum’s unlimited possibilities. It allows users to trade assets and borrow and lend money directly with one another without involving banks.

Alex Adelman, the CEO of Lolli, described Ethereum: “When people compare Bitcoin and Ethereum it’s a bit like comparing gold with electricity. They are both valuable but have very different uses. Ethereum is infrastructure. It is a blockchain that is in the early days but has the potential to revolutionize finance and technology.”

The Case for Bitcoin

As a crypto asset, Bitcoin is the undisputed leader. When people think of cryptocurrency, Bitcoin often comes first to the mind. This type of brand recognition is nearly impossible to penetrate, much like Advil owning the word of Ibuprofen. Big corporations such as Tesla, Square, and MicroStrategy hold Bitcoin on their balance sheets. Institutional support can provide more liquidity and more stable prices.

Jason Yanowitz, the co-founder of Blockworks, argues that Bitcoin holds a huge advantage as the standard currency. And he points out that there is no guarantee that Ethereum will hold its leadership in DeFi platforms: “Today, Ethereum powers most of the DeFi (decentralized finance) platforms, but in the near future, we’ll be able to build DeFi platforms on top of Bitcoin thanks to layer 2 solutions. Eventually, Bitcoin will become both the global standard of value and the monetary settlement layer of the world.”

The biggest drawback about Ether is that its currency relies on how prosperous Ethereum becomes. If the platform becomes unpopular, Ether’s value can decline.

Bottom Line

Arguably, Ether could have a bigger upside with its DeFi platform – which is only limited by developers’ imagination. But the risk is higher.

Bitcoin is the leader of cryptocurrency, and billion-dollar corporations prefer to hold Bitcoin as a store of value. Because of its first-mover advantage and brand recognition, Bitcoin can be considered safer than Ether. But keep in mind, all cryptos historically are volatile.

Cornerstone Macro analysts wrote to their clients: “Given that there are diversification opportunities among digital coins themselves, we should consider a small basket of them, rather than just Bitcoin alone, when we assess whether some allocation to crypto assets can reduce portfolio volatility alongside traditional assets.”

Instead of betting on one crypto asset, an investor can diversify its crypto portfolio with both Ether and Bitcoin.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.