Bitcoin vs Ethereum: How They Differ and What Moves Their Prices

Bitcoin and Ethereum are the two largest cryptocurrencies, and they are often mentioned in the same breath. But they were built for different purposes, work in different ways and respond to some different forces. Understanding those differences helps you make sense of why their prices sometimes move together and sometimes don't — and how to manage the risk of trading each one.

This guide compares Bitcoin and Ethereum across purpose, supply, technology, fees and price drivers, and then looks at what those differences mean in practice for traders. If you want a fuller introduction to either network first, read what is Bitcoin and what is Ethereum.

Two different designs

Bitcoin: digital money with a fixed supply

Bitcoin was introduced in October 2008 in a white paper by the pseudonymous Satoshi Nakamoto, Bitcoin: A Peer-to-Peer Electronic Cash System, and the network launched in January 2009. Its goal was a form of digital money that could be sent between people without a bank or other trusted intermediary.

Bitcoin's design is deliberately conservative. Its scripting language is limited, changes to the protocol are slow and contested, and its monetary policy is fixed: a maximum of 21 million bitcoins, with the rate of new issuance halving roughly every four years. Many holders today think of Bitcoin primarily as a store of value — sometimes called "digital gold".

Ethereum: a programmable blockchain

Ethereum was proposed by Vitalik Buterin in 2013 and launched in July 2015. Where Bitcoin is focused on being money, Ethereum was designed as a general-purpose platform: a blockchain that runs smart contracts — programs that execute automatically according to their code.

Those contracts power a wide range of applications: tokens (including many stablecoins), decentralised exchanges, lending platforms and digital collectibles. Ether (ETH), Ethereum's native currency, is used to pay for the computation and storage those applications consume, in the form of fees known as "gas".

Side-by-side comparison

How the networks are secured

Proof of work (Bitcoin)

Bitcoin miners compete to solve a computational puzzle; the winner adds the next block and earns newly created bitcoin plus fees. The work requires real electricity and hardware, which makes rewriting the blockchain prohibitively expensive. The trade-off is substantial energy use.

Proof of stake (Ethereum)

Ethereum originally used proof of work too. In an upgrade called the Merge, completed on 15 September 2022, it switched to proof of stake. Validators lock up (stake) ETH as collateral and are selected to propose and confirm blocks. Misbehaviour can be penalised by destroying part of their stake. According to ethereum.org, the switch reduced Ethereum's energy consumption by around 99.95%.

For traders, the consensus mechanism matters indirectly: it shapes issuance, how coins are held (a large share of ETH is staked), and the narratives that influence demand.

Supply: fixed versus flexible

Bitcoin's supply is completely predictable. You can calculate today how many bitcoins will exist in any future year. The halving schedule is explained in our article on crypto market cycles.

Ethereum's supply is not fixed. New ETH is issued to validators as rewards. Since an upgrade in August 2021 (known as EIP-1559), part of every transaction fee is burned — permanently removed from circulation. When network activity is high, more ETH is burned; in busy periods, burning can exceed new issuance, making supply shrink. In quiet periods, supply grows modestly.

This means ETH's supply is linked to how much the network is used, while BTC's is not.

How transaction fees work

Fees are one of the most practical differences between the two networks.

Bitcoin fees

Bitcoin fees are paid in satoshis (one hundred-millionth of a bitcoin) per unit of transaction size, commonly quoted as "sats per virtual byte". A transaction's fee depends on how much data it takes up — roughly, how many inputs and outputs it has — not on how much value it moves. Sending $10 and sending $10 million can cost the same fee. When many people want their transactions included in the next block, which arrives about every ten minutes, users bid higher fees and miners prioritise the highest bidders.

Ethereum fees (gas)

On Ethereum, every operation a transaction performs consumes a measured amount of gas. A simple ETH transfer uses a small, fixed amount; interacting with a complex smart contract uses much more. The total fee is the gas used multiplied by the price per unit of gas. Since the 2021 upgrade, that price has two parts: a base fee, set by the protocol according to how full recent blocks were and burned, and an optional priority fee (a tip) paid to the validator.

For traders, fees matter mainly when moving coins between wallets and venues. During busy periods on either network, fees can rise sharply and transfers can take longer — worth remembering before you need to move funds quickly.

What moves each price

Both assets respond to broad forces: overall crypto sentiment, global liquidity and interest rates, regulation, and flows from large investors. But each also has its own drivers.

Bitcoin-specific drivers

• Store-of-value demand, including from long-term holders and institutions.
• Investment products such as exchange-traded funds, which give traditional investors access.
• The halving cycle, as a source of expectations, whatever its true effect.
• Mining economics, since miners are natural sellers of new coins.

Ethereum-specific drivers

• Network activity: demand for block space from applications, which affects fees and the amount of ETH burned.
• Staking: the share of ETH locked in staking, and staking yields.
• Protocol upgrades that change fees, scalability or issuance.
• Competition from other smart-contract platforms.

Correlation

In practice, BTC and ETH frequently move in the same direction, especially during sharp market-wide moves. ETH has historically shown larger percentage swings than BTC in both directions. Periods of divergence tend to coincide with events specific to one network.

What the differences mean for traders

Volatility and position sizing

Because ETH has typically been more volatile than BTC, the same stop-loss logic leads to wider stops on ETH. To keep risk per trade constant, positions in ETH should usually be smaller. A volatility measure such as the Average True Range makes this concrete — see technical indicators explained and our risk management guide.

Correlated exposure

Holding long positions in both BTC and ETH is not twice the diversification — in a broad sell-off, both are likely to fall together. Count them as related exposure against your maximum open risk.

Different news, different reactions

An Ethereum-specific upgrade or a sharp change in network fees may move ETH without moving BTC. A Bitcoin-specific event, such as news about Bitcoin investment products, may lift BTC more than ETH. Knowing which events affect which asset helps you avoid being surprised.

The ETH/BTC relationship

Some traders watch the ETH price measured in BTC to judge relative strength. When ETH outperforms BTC, it is often a sign of increased appetite for risk within crypto; when BTC outperforms, money is often concentrating in the largest, most established asset.

Risks specific to each network

Both assets share crypto's general risks — volatility, regulatory change and the security of wherever you hold them. Each also has its own:

Bitcoin

• Concentration in mining. A large share of mining power is organised into a small number of mining pools. The protocol's incentives discourage misuse, but concentration is a long-standing concern.
• Narrow use case. Bitcoin's value depends heavily on continued belief in it as a store of value; it has fewer other sources of demand.
• Slow protocol change. Its conservatism is a strength for stability but makes adapting to new needs slow.

Ethereum

• Smart-contract risk. Applications built on Ethereum can contain bugs. Exploits of individual applications have caused large losses, even though the Ethereum network itself kept running.
• Complexity. More features and frequent upgrades mean more moving parts that could fail or behave unexpectedly.
• Competition. Other smart-contract platforms compete for the same developers, users and fees.
• Staking concentration. A large share of staked ETH sits with a limited number of staking providers.

None of these is a prediction that anything will go wrong. They are reasons why the two assets can react differently to news — and why position sizes should reflect that each carries risks of its own.

A worked example

A trader wants equal risk on a BTC trade and an ETH trade, risking $40 on each. On the 4-hour chart, BTC's ATR is $900 and ETH's ATR is $60. Using a stop of 1.5 × ATR:

• BTC: stop distance $1,350. Position size = $40 ÷ $1,350 ≈ 0.030 BTC.
• ETH: stop distance $90. Position size = $40 ÷ $90 ≈ 0.44 ETH.

Both trades now lose $40 if stopped out, despite the very different prices and volatility. And because the two are correlated, the trader treats them as roughly $80 of related risk rather than two independent $40 bets.

Common misconceptions

• "Ethereum is just a competitor to Bitcoin." They overlap but serve different main purposes.
• "Both have a fixed supply." Only Bitcoin does.
• "Proof of stake made Ethereum risk-free." It changed how the network is secured, not the price risk of ETH.
• "A lower price per coin means cheaper." The price of one coin says nothing about value; what matters is position size relative to risk.

Trading BTC and ETH on RumiEX

RumiEX lists Bitcoin and Ethereum quoted against USDT (a stablecoin — see what are stablecoins). These instruments are marked OTC, meaning they are quoted by RumiEX's own pricing engine rather than taken from an external exchange, and are available around the clock. You can see live prices on the markets page and practise on a free demo account.

Key takeaways

• Bitcoin is designed as digital money with a fixed 21-million supply; Ethereum is a programmable platform whose currency pays for computation.
• Bitcoin uses proof of work; Ethereum has used proof of stake since the Merge in September 2022.
• ETH supply depends on network activity because part of every fee is burned.
• The two often move together, with ETH historically more volatile.
• Size positions by volatility and treat BTC and ETH exposure as related risk.

Continue with why crypto is so volatile to understand the forces behind large crypto moves.