Ethereum vs. Bitcoin: Assessing the Usage–Value Split as a Framework for Price Prediction

The debate between Ethereum and Bitcoin has evolved from a simple rivalry to a nuanced analysis of their distinct economic models. As the digital asset landscape matures, investors and analysts increasingly rely on the usage-value split framework to evaluate price trajectories. This framework dissects an asset's value into two components: store-of-value (SoV) attributes and utility-based functions. By applying this lens to Bitcoin and Ethereum, we uncover critical insights into their roles in the global financial system and their potential for future growth.

Bitcoin: The Store-of-Value Benchmark

Bitcoin's dominance as a store of value is underpinned by its fixed supply cap of 21 million coins and its low-velocity usage. Over 61% of its supply remains dormant for more than a year, with daily turnover at just 0.61%. This behavior mirrors traditional precious metals, reinforcing its narrative as "digital gold." Institutional adoption has further solidified Bitcoin's SoV role, with public companies and ETFs collectively holding over 10 million BTC by 2025.

Bitcoin's price predictions reflect its scarcity-driven model. Analysts project it could reach $150,000 in the first half of 2025 and exceed $185,000 by year-end, driven by institutional demand and DeFi expansion on Bitcoin L2s. Machine learning models, such as ensemble learning and support vector regression (SVR), corroborate these forecasts by integrating macroeconomic indicators and blockchain data.

Ethereum: The Utility-Driven Hybrid

Ethereum operates as a hybrid asset, balancing store-of-value characteristics with utility-driven functions. While 52% of its supply is held long-term, its turnover rate is roughly twice Bitcoin's, reflecting active usage in decentralized finance (DeFi), non-fungible tokens (NFTs), and tokenized real-world assets (RWAs). Ethereum's dynamic supply model, introduced via EIP-1559, creates scarcity through transaction fee burning during high network activity, reducing circulating supply and enhancing its SoV appeal.

However, Ethereum's core strength lies in its utility. It powers over 16% of its supply in liquid staking and collateralized structures, with staking yields offering 3-6% annual returns. The platform's transition to proof-of-stake (PoS) in 2022 and upcoming upgrades like the Fusaka hard fork have improved scalability and reduced transaction costs, positioning Ethereum as foundational infrastructure for Web3.

Price predictions for Ethereum vary widely, ranging from $5,500 in 2025 to $15,000 by 2027, depending on regulatory clarity and ecosystem adoption. A 54% share of the stablecoin market ($123.4 billion in market cap) and growing institutional custody (with exchange-held balances dropping to 11.3%) further underscore its utility-driven growth.

Comparative Analysis: Usage-Value Split in Action

The usage-value split framework highlights divergent paths for Bitcoin and Ethereum. Bitcoin's value is primarily derived from its scarcity and low-velocity usage, aligning with traditional SoV assets. In contrast, Ethereum's value is a function of both scarcity (via usage-driven supply reduction) and utility (as a programmable platform).

This duality is evident in their supply dynamics. Bitcoin's exchange-held balances have declined by ~1.5%, reflecting its role as a capital-preservation asset. Ethereum's decline (~18%) signals its transition to working collateral in DeFi and other ecosystems. While Bitcoin's price is influenced by macroeconomic factors like inflation and institutional demand, Ethereum's valuation is more closely tied to network activity, technological upgrades, and regulatory developments according to research.

Price Prediction Implications

Applying the usage-value split framework to price prediction reveals distinct trajectories. For Bitcoin, the focus remains on scarcity and institutional adoption. A 2025 study notes that Bitcoin price shocks account for 18% of equity and 27% of commodity price fluctuations, underscoring its systemic integration. For Ethereum, utility-based metrics-such as staking rates (projected to surpass 50% of circulating supply) and DeFi growth-will drive valuation according to analysis.

Machine learning models further validate these trends. An LSTM model achieved 90.4% accuracy in predicting Ethereum's daily closing prices using historical data and technical indicators. Similarly, Bitcoin's price forecasts leverage ensemble models that incorporate macroeconomic and blockchain data.

Conclusion

The usage-value split framework provides a robust lens for evaluating Bitcoin and Ethereum. Bitcoin's role as a store of value is well-established, with price predictions anchored in scarcity and institutional demand. Ethereum, however, represents a more complex asset, where utility-driven functions and dynamic supply models create a dual valuation mechanism.

For investors, this analysis suggests a diversified approach: Bitcoin offers capital preservation and systemic resilience, while Ethereum provides exposure to innovation and growth. As the digital economy evolves, both assets will likely coexist, each fulfilling distinct but complementary roles in the global financial ecosystem.