Balancer vs Bitcoin: Which Crypto Should You Buy In 2022

Last Updated April 5th 2022
17 Min Read

The cryptocurrency market looks to be on the road to recovery following a downturn that struck at the beginning of 2022, with Bitcoin inevitably leading the way. However, after DeFi exploded in popularity over recent months, projects like Balancer are also attracting investor interest. So of the two, which is likely to be the better pick for your portfolio?

Bitcoin may be the oldest token on the market, built on a network that cannot support DeFi, but it nonetheless continues to be the top performer on the market. But as the cryptocurrency sector continues to evolve and offer more digital finance services, an increasing number of investors are looking to get more exposure to DeFi projects. And Balancer is one such project. 

Balancer is an Ethereum-based project that lets users create or provide liquidity to trading pools. Put simply, it is a place to buy, sell, lend and borrow cryptocurrency.  Of course, there are many Automated Market Makers operating in the DeFi space, but Balancer’s strength is that it allows up to 8 tokens to be bundled in the same liquidity pool. 

So why compare Balancer vs Bitcoin? To be fair, it’s difficult to make a direct comparison from a technical perspective, given that Bitcoin launched over ten years before Balancer. However, when it comes to token price, Bitcoin is the yardstick against which all other tokens are measured.

In the following article, we’ll be looking at the fundamentals of both Bitcoin and Balancer as well as checking out some leading price predictions to help you decide where each token may fit into your wider investment strategy. 

Balancer vs Bitcoin - The Fundamentals

Balancer vs Bitcoin image

Before we look at the technical particulars of Balancer vs Bitcoin it’s important to remember that one project is significantly older than the other. This means that Balancer will almost definitely outperform Bitcoin in terms of speed and scalability. However, anyone considering buying Balancer or Bitcoin needs to have a good grasp of what each platform does and what makes it different from other projects out there. 

Balancer

Background

Balancer actually started life back in 2018,  as a research project at a software firm called BlockScience, which was founded by Mike McDonald and Fernando Martinelli. The entity then held an ICO under the name Balancer Labs, raising some $3 million in funding for the project's launch in 2020. 

On the face of things, Balancer looks like just about any other decentralised exchange, such as Uniswap or Curve, in that it incentivises users to provide liquidity to support the buying and selling of tokens. However, Balancer brings something slightly different to the table in that it offers pools that contain up to eight tokens. 

So far, the formula appears to have been a success. According to DeFi Pulse, Balancer is the ninth biggest DeFi project in terms of value locked in, with an estimated $2.19 billion currently on its books, 

Platform fundamentals

Balancer Protocol is an Ethereum-based DeFi protocol that acts as an AMM, portfolio manager exchange service. Like many Ethereum DeFi projects, Balancer offers trustless and permissionless trading of ERC-20 tokens in an environment that mimics several real-world financial services. 

Users on the Balancer platform can buy and sell cryptocurrencies, set up liquidity pools or invest in existing ones to earn yields from other traders. This puts Balancer squarely in competition with the likes of Curve, Aave, Maker and Compound

However, what makes Balancer special is that up to eight tokens can be bundled into its liquidity pools. There are also additional services that tie these pools together, allowing users to gain exposure to up to 50 tokens.  In this sense, Balancer works in much the same way as an index tracker fund. For example, if a pool were to contain 25% ETH, 25% DAI and 50% 0x, then those providing liquidity can earn fees on the trading of each of those tokens. 

The Balancer token

Powering the Balancer protocol is its native token BAL. Liquidity providers on the platform earn BAL for committing their tokens. In addition to this, traders also receive BAL as a way of offsetting GAS fees when making transactions. 

BAL is also the governance of the platform, which means holders get a say in proposals relating to protocol changes. This means users can directly influence the direction of the project, voting on things like platform fees and the terms under which BAL is paid out to network participants. 

According to the Balancer website, BAL has a supply cap of 100 million, with some 10,799,858 in circulation at the time of writing. 

Don't Miss: Best Methods On How To Earn Balancer (BAL) Coins Fast

Bitcoin

Background

Bitcoin is a pretty straightforward project by today’s standard. The original cryptocurrency was outlined in a whitepaper way back in 2008 and was intended to be a digital alternative to cash. In the early days, it was seen as something of a gimmick but within a few years it had become one of the most exciting alternative investment assets on the planet. 

Bitcoin introduced the world to blockchain technology and its limitless potential, but it's fair to say it has never really taken off as a digital currency for the simple reason that BTC transactions are far too costly - both in terms of fees and energy usage. The Bitcoin platform is also fairly slow, meaning it is unlikely to ever be able to support retail payments. 

Bitcoin is now first and foremost an investment asset. It has largely dispensed with any pretensions of real-world use cases and in 2022 it is instead looked at as an alternative to the financial markets. In fact, many large scale investors believe that BTC has become the digital gold - a way to store value, much in the same way the yellow metal has been for centuries. 

Transactions and Speed

As we’ve mentioned, the reason that Bitcoin is unlikely to ever be used for regular retail payments is that it uses a huge amount of resources and is comparatively slow. With a block creation time of roughly ten minutes, Bitcoin supports around 5 transactions per second. By comparison, VISA can handle around 1700 and the leading smart chains can put through tens of thousands. 

The reason for this sluggishness is that Bitcoin relies on a fairly dated proof of work consensus mechanism wherein computers on the network compete to solve complex mathematical problems. Whenever one of these miners gets to add a block to the network, they are rewarded with BTC. Unfortunately, this requires a huge amount of computational power - think warehouses full of machines - and the Bitcoin network has been known to consume the same amount of power as a small first-world country. 

The BTC token

New Bitcoin is released whenever miners complete a new block. This is known as the block reward and a key aspect of the Bitcoin economy is that this reward is halved at regular intervals. For example, in 2012 miners received 25 BTC for completing blocks. In 2016, that was reduced to 12.5 BTC and in 2020 it was halved again to 6.25 BTC. The next halving is predicted to take place in 2024.

This means that the number of new Bitcoin tokens being minted is gradually dwindling. Combined with this, the total supply of BTC is hard-capped at 21 million. The idea is that this is an in-built deflationary mechanism that means Bitcoin is becoming scarcer over time - which, if demand starts to outstrip supply, could serve to drive up the token’s value. 

It’s also worth noting that the bigger Bitcoin investors out there tend to buy and hold tokens for the long term. Once again, this reduces the number of tokens in open circulation which suggests the token could increase in price as it becomes harder to come by. 

Check Out: Ways to Make (or Lose) Money With Bitcoin (BTC)

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Balancer vs Bitcoin: Which Is The Better Investment?

Now that we’ve looked at the fundamentals of both Balancer and Bitcoin, we can move on to looking at price data, which is ultimately what informs most cryptocurrency price predictions. 

Bitcoin vs Balancer: Price History

Before we look at price predictions, we first need to look at how each token’s price has moved previously - as this information is the foundation of most forecasts. As we shall see, each of these tokens has seen some interesting price movement and both have the potential to surge in value. 

Balancer

Balancer is a relatively new token so compared to Bitcoin it has relatively little price data for us to look back on. However, there is still enough history for us to get an idea of how BAL moves in line with the wider crypto market, as well as how it has fared during times of economic downturn seen in the last 18 months or so. 

BAL stands out from many tokens in that it commanded a relatively high price early on, trading at over $17 just a few days after having hit the markets. The token’s value then dipped to around $8.26 but it wasn’t long before things picked up and by 10 August 2020 BAL had hit $26.56. A month later, the token surged again, reaching an average price of $34.46. 

BAL saw another price slump before the end of 2020, dropping to $8.92 in November before finishing the year at $13.72. Things then picked up again in 2021 and BAL saw some impressive price runs early on. By the end of January, the token had reached $28.33 before surging to $52.17 just two weeks later. Balancer held its value well and, despite the occasional dip, continued to trend upwards until reaching its all-time high of $74.45 in May.

Balancer was then hit hard by a market downturn that struck in summer 2021, with its trading price dropping to $15.05 by the end of July. Whereas some tokens then went on to recover and hit record highs in the latter half of the year, BAL remained relatively subdued. It climbed to $33.28 in September but generally declined towards the end of the year.

Another market slump occurred in January 2022, which again pushed BAL price down significantly. By the end of the month, it was trading at $11.51. Things have since picked up slightly.

Bitcoin

Bitcoin’s price history stretches back to 2009 when the tokens changed hands for mere pennies. However, it should be remembered that the network of crypto exchanges and brokers did not exist back then, so BTC was bought and sold peer-to-peer. However, by 2013 there were several places retail investors could buy Bitcoin, which had reached an impressive trading price of $1,242 per token. 

Over the next few years, Bitcoin gathered momentum as a serious investment opportunity. By the time 2018 arrived, the token had reached an unprecedented trading price of $19,783. However, the ongoing bull market proved unsustainable and Bitcoin’s value crashed later that year. By December 2018, BTC had slumped to $3,430.

Despite the downturn wiping significant value off of Bitcoin’s value, it wasn’t long before the market was on its way back up. By 2020, the token had recovered well and was trading above $10,000. As cryptocurrency investing became increasingly mainstream, Bitcoin continued to creep up in value before things really took off in 2021. 

In the first quarter of 2021, Bitcoin reached a high of $64,804 following several price surges. When summer arrived, the market was hit by a downturn following regulatory changes in China, but Bitcoin was quick to recover and in November it soared to an all-time high of $69,044. 

When the new year arrived, so did another downturn and Bitcoin almost halved in value to $35,180 in January. Things remained subdued for several weeks before recovery started in earnest.

Bitcoin vs Balancer: Future Predictions

The price histories of Bitcoin and Balancer are worth considering as they tell us something about how these tokens move in relation to each other and the wider market, as well as how they respond to external economic pressures. However, ultimately what we are interested in is how each token is likely to perform in future. For this, we need to consult price predictions from leading market analysts. 

Balancer

It seems that Balancer price predictions for the coming years are something of a mixed bag, with some analysts forecasting significant growth whilst others see difficult times ahead.

DigitalCoinPrice has Balancer performing well in the coming years. Its analysis suggests that the altcoin will have reached an average trading price of $22 by the end of 2022 and will continue to climb year on year - albeit at a fairly pedestrian rate. By the time 2024 arrives, BAL is expected to be worth $23.56 on average and by 2025 we could see BAL reach as high as $35.73.

Meanwhile, TradingBeasts is predicting tougher times ahead for BAL. According to its technical analysis, the token will struggle to hold its price across 2022 and could actually drop by around 20% in 2023. However, a surge at the end of the year will see the token recover to an average trading price of $18.14.

The most optimistic Balancer price prediction we came across was over on Priceprediction.net. Its figures have BAL holding steadily over 2022 before rising substantially in 2023, reaching an average trading price of $23.11. A year later, the token is expected to be trading at $34.24 and by the time 2025 arrives, BAL is predicted to be worth a maximum of $58.22.

Read Also: Balancer (BAL) Price Prediction

BTC

It seems that Balancer investors will see changing fortunes in the coming years, but what about those choosing to invest in Bitcoin? It seems the original cryptocurrency has started to recover from the market downturn that struck in January 2022, but analysts’ views on how quickly it will regain the kind of prices we saw in 2021.

According to DigitalCoinPrice, Bitcoin should be over the worst of the downturn and will see impressive price gains over the remainder of 2022, reaching up to $52,137 by the end of the year. The next twelve months are expected to be reasonably uneventful, with Bitcoin making nominal gains and ending 2023 at around $57k. DigitalCoinPrice then expects BTC to reach $72,745 by the time 2025 arrives.

Elsewhere, WalletInvestor is also predicting a more positive 2022 ahead for Bitcoin. According to its analysis, BTC will reach $57,855 by the end of the year. Growth is then expected to accelerate in 2023 and Bitcoin could reach $83,000 by December, according to WalletInvestor. Then 2024 could finally be the year that Bitcoin climbs past $100k.

TradingBeasts has predicted a slightly different trajectory for Bitcoin. It actually sees the token losing value over the coming months - particularly in 2023, when BTC could drop in value by as much as 27%. However, the platform then believes Bitcoin will start to recover and should be trading above $60,000 by the end of 2024.

The above predictions should make interesting reading for anyone looking to invest in Bitcoin or Balancer, but we should point out that they are highly speculative and there are no guarantees that any of them will prove accurate. As such, investors should conduct their own research before making any portfolio additions.

Don't Miss: Bitcoin (BTC) Price Prediction

Balancer vs Bitcoin: What The Experts Say

As we’ve noted above, price predictions are not guaranteed and should not in themselves form the basis of an investment strategy. Those looking to add either Balancer or Bitcoin are advised to consider as many information streams as possible. An often overlooked indicator of market sentiment is the opinions of business, finance and cryptocurrency experts.

Bitcoin has plenty of support from the world of big business. At the start of 2021, Elon Musk’s Tesla famously invested $1bn in the cryptocurrency and Galaxy Digital financier Mike Novogratz has long been a vocal supporter, lately claiming Bitcoin to be a better option than gold for investors looking for a place to put their funds in terms of economic downturn.

Balancer is far less well known than Bitcoin but it’s not without its supporters. Crypto influencer and analyst Tyler Swope has previously named Balancer as one of his top picks in the DeFi space, putting it above Uniswap thanks to Balancer’s liquidity pools supporting more than two tokens.

Balancer vs Bitcoin: Conclusion

Having looked at Balancer vs Bitcoin from an investment perspective, it appears there are solid reasons to consider adding both tokens to your portfolio. In fact, they may even complement each other for diversification purposes, as there is fairly minimal convergence between the two. 

Balancer is probably the riskier of the two. DeFi is still an emerging industry and there are a lot of competitors out there. Whilst Balancer’s multi-token liquidity pools certainly make it appealing for DeFi users, there’s nothing to say that rival platforms will not offer similar services in the future.

Of course, there’s nothing unique about Bitcoin at this stage - in fact, its infrastructure was more or less cloned within a few years of its having launched. However, when it comes to being an investment asset, BTC is in a league of its own and shows no signs of being rivalled any time soon. 

As we saw with the price predictions for Bitcoin and Balancer, both tokens look set for growth in the coming years although both are expected to go through short periods of price stagnation. However, investors looking at the long term picture are likely to see growth after 2025, according to the forecasts we looked at. 

All things considered, either of these tokens is worth considering for your portfolio but they have different levels of risk. Whilst the crypto market is always volatile, Bitcoin is generally seen as one of the more stable tokens, whereas Balancer is yet to prove that it can maintain its higher-end price. 

If you want to invest in crypto assets in 2022, then the first thing you’ll need to do is make sure you have a wallet that can store a wide variety of tokens. These come in a variety of formats, including hardware wallets, and it's possible you may need more than one wallet, depending on the tokens you want to add to your portfolio. 

Once you’re set up with a wallet, the next thing you’ll need to do is find a broker or exchange that can give you access to the markets. We usually recommend eToro, as it has one of the best reputations in the industry and offers a highly approachable trading platform. 

eToro – The Best Place To Buy Cryptocurrencies 

Open an account with eToro, deposit some funds with USD, and finally – buy cryptocurrencies from just $10.

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FAQs

Is Balancer better than Uniswap?

Whilst Uniswap is amongst the most well known DeFi projects out there, it appears that Balancer is a preferred option for some investors. The main advantage that Balancer has over Uniswap is that its liquidity pools support more tokens. Balancer also has other protocols which allow users to gain exposure to even more tokens. 

Is buying Bitcoin a good idea in 2022?

Anyone looking to invest in Bitcoin - or any other cryptocurrency - needs to be fully aware of what it is they are buying. The crypto market offers substantial opportunities for investors but it is notoriously volatile. Bitcoin could well prove to be a good investment, but it is also possible it could lose value in the near future. As such, an investment strategy is essential for anyone looking to buy Bitcoin in 2022. 

How can I invest in DeFi?

DeFi has been one of the most popular blockchain innovations to date and the top tokens in the space have been on some impressive price runs in recent months. If you want to invest in DeFi, then the best way to do it is by acquiring a holding of a project’s native token. Most of the top projects, such as Uniswap, Maker and Compound can be bought via brokers like eToro. 

Will Bitcoin reach $100k?

Ever since Bitcoin broke the $50k barrier investors have been talking about when and if the token will reach $100k. Given that it hit $69k in 2021, it seems that there’s every chance BTC will reach six figures in the coming years. In fact, some Bitcoin price predictions suggest that BTC will reach $100k by 2025. 

Do I have to stake tokens to use DeFi?

DeFi offers cryptocurrency holders the chance to put their tokens to work but for the less technically minded, the leading platforms can be prohibitively complicated.  However, you don’t actually need to use DeFi projects in order to benefit from their popularity. Buying the native tokens of projects like Balancer and Aave is a great way to gain exposure without having to learn the inner workings of the liquidity pool systems.

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