Bitcoin vs Ethereum: 9 Key Differences

Purpose refers to the core function a cryptocurrency was designed to serve. It shapes the network's architecture, development priorities, and the type of activity that drives demand for the token.

Bitcoin was created as a decentralised digital currency. Its design prioritises security and simplicity, with a single function: transferring value without a central authority. This narrow focus underpins its positioning as a store of value, comparable to gold.

Ethereum was created as a programmable blockchain platform. Its design prioritises flexibility, enabling developers to build smart contracts and decentralised applications (dApps) on the network. Ether, the native token, functions as payment for computation and transactions on the platform rather than as a standalone currency.

Supply refers to the total number of tokens that exist or can ever exist for a cryptocurrency. It influences scarcity, inflation expectations, and long-term price narratives.

Bitcoin has a fixed maximum supply of 21 million coins. New coins enter circulation through mining rewards, which halve approximately every four years in an event known as the Bitcoin halving. This predictable reduction in issuance reinforces Bitcoin's scarcity narrative.

Ethereum has no fixed supply cap. Its monetary policy changed with the introduction of EIP-1559 in August 2021, which burns a portion of transaction fees paid on the network. During periods of high network activity, the burn rate can exceed the issuance rate, making Ethereum temporarily deflationary.

A consensus mechanism is the process a blockchain network uses to validate transactions and add new blocks without a central authority. It determines how the network achieves agreement on the state of the ledger.

Bitcoin uses proof of work (PoW). Miners compete to solve cryptographic problems, and the first to solve the problem validates the block and receives a mining reward. This process requires significant computational power and energy consumption.

Ethereum uses proof of stake (PoS), having transitioned from proof of work in September 2022. Validators stake their Ether as collateral to participate in block validation. Validators who attempt to approve fraudulent transactions risk losing their staked Ether, a penalty known as slashing.

Transaction speed refers to how quickly a blockchain network confirms and finalises a transaction. It reflects the network's processing efficiency and block production rate.

Bitcoin produces a new block approximately every 10 minutes and processes around 7 transactions per second. Confirmation times range from 10 to 60 minutes depending on network congestion.

Ethereum produces a new block approximately every 12 seconds and processes 15 to 30 transactions per second on its main network. Confirmation times are shorter than Bitcoin's, though they vary with network demand.

Market capitalisation is the total value of a cryptocurrency's circulating supply, calculated by multiplying the current price by the number of tokens in circulation. It serves as a measure of an asset's relative size and is a factor in liquidity depth and price stability.

Bitcoin has the largest market capitalisation of any cryptocurrency, valued at approximately $1.43 trillion as of early 2026. Bitcoin dominance stands at roughly 56% of the total crypto market. This concentration of capital attracts the highest volume of institutional and retail flow, contributing to tighter spreads and deeper order books.

Ethereum is the second-largest cryptocurrency by market capitalisation, valued at approximately $233 billion as of early 2026. It holds a smaller market share than Bitcoin but remains significantly larger than any other cryptocurrency, giving it deep liquidity and broad trading access across brokers and exchanges.

Liquidity refers to how easily an asset can be bought or sold without causing a significant change in its price. Higher liquidity results in tighter bid-ask spreads, lower slippage, and more reliable order execution.

Bitcoin is the most liquid cryptocurrency. Its market capitalisation and trading volume attract the deepest order books across exchanges and brokers, producing consistently tight spreads. For CFD traders, this means lower transaction costs and more predictable entry and exit prices.

Ethereum is the second-most liquid cryptocurrency. Its trading volume and order book depth are lower than Bitcoin's but remain substantial. Spreads on Ethereum CFDs are wider than Bitcoin's, and slippage risk increases during periods of low activity or sudden volatility.

Volatility measures the degree to which an asset's price fluctuates over a given period. Higher volatility creates larger price swings, which increases both the profit potential and the risk of loss on a leveraged position.

Bitcoin is volatile relative to traditional asset classes like forex and equities, with annualised volatility ranging between 60% and 80% in 2025. Its larger market capitalisation and deeper liquidity absorb large orders with less price disruption, producing comparatively smoother price action. Bitcoin's 30-day realised volatility sat at 38.2% in late 2025, reflecting periods of compressed movement between sharper swings.

Ethereum is more volatile than Bitcoin. Its 30-day realised volatility reached 61.2% over the same period, roughly 1.6 times Bitcoin's reading. Its smaller market capitalisation and thinner liquidity amplify the impact of large orders and shifts in sentiment. Price swings on Ethereum tend to be sharper in both directions, requiring wider stop-loss placement and more careful position sizing.

A price driver is any factor that creates sustained buying or selling pressure on an asset. Different price drivers produce different trading setups and require different forms of analysis.

Bitcoin's price responds primarily to macroeconomic conditions, institutional capital flows, and supply-side events. Federal Reserve interest rate decisions, U.S. dollar strength, and inflation data all influence Bitcoin's price because institutional participants treat it as a macro asset. The Bitcoin halving, which cuts the mining reward in half approximately every four years, reduces the rate of new supply entering the market and has preceded each of Bitcoin's major bull cycles. Spot Bitcoin ETF inflows and corporate treasury allocations add a further demand-side variable that is unique to BTC.

Ethereum's price responds to network activity, protocol upgrades, and the broader DeFi ecosystem. Rising transaction volume increases the amount of ETH burned through the EIP-1559 fee mechanism, which reduces circulating supply. Major protocol upgrades, such as the transition to proof of stake in September 2022, shift market sentiment by changing Ethereum's economic model and energy profile. Growth in DeFi total value locked (TVL), NFT activity, and Layer-2 adoption all generate demand for ETH as the base-layer settlement token.

Correlation measures how closely two assets move in the same direction over a given period. A coefficient of 1.0 means the two assets move in lockstep; 0.0 means their price movements are unrelated.

Bitcoin and Ethereum have a historical correlation coefficient of approximately 0.7 to 0.8, meaning they move in the same direction most of the time. Broad market selloffs and risk-on rallies tend to push both assets in unison, limiting the diversification benefit of holding positions in both simultaneously.

The correlation breaks down during periods driven by asset-specific catalysts. Bitcoin rose roughly 16% from April 2024 through March 2025 on the back of ETF inflows and post-halving momentum, while Ethereum fell nearly 50% over the same period. These divergences create relative-value opportunities for CFD traders, who can go long on one asset and short on the other without taking a directional view on the broader crypto market.