The cryptocurrency landscape has undergone significant changes in recent years, with Bitcoin and Ethereum emerging as two of the most dominant players. However, their roles have shifted, and their scarcity models are no longer aligned.
Bitcoin's supply is capped at 21 million coins, with about 95% already in circulation. The network issues approximately 164,250 BTC per year, which will be halved to 82,125 after the next 'halving' in 2028. This scarcity model is expected to drive up prices as buyers compete for a dwindling supply.
Ethereum, on the other hand, has a conditional scarcity model. The Dencun upgrade in March 2024 incentivized user activity to migrate to cheaper layer 2 networks, resulting in a net annual expansion of Ethereum's supply at around 0.23%. This pace could increase or decrease depending on main chain activity.
Staking Ethereum earns an annual return of 2.8% to 3.5%, but owning Bitcoin grants a fixed share of a shrinking-issuance asset, regardless of network activity.