Will ETH Ever Surpass BTC, Asks The FlippeningTable of Contents
Will ETH Ever Surpass BTC, Asks The Flippening
By CoinUnited.io Research Team
3 min read
While there is currently no reliable method of predicting when this momentous occasion will occur, Ethereum's dominance in the crypto industry provides valuable insight. It is the metric by which Ethereum's position in the cryptocurrency market is evaluated. In June of 2017, when ETH's dominance reached 25.32 percent, it came the closest to challenging BTC. This was the heyday of initial coin offerings (ICOs), when many altcoins were being made based on the Ethereum protocol, which was great news for older investors. But unfortunately for Ethereum's maximalists (maxis), Bitcoin's market valuation has shown no signs of slowing down since then. Bitcoin's popularity skyrocketed with the Taproot upgrade, which increased transaction privacy and efficiency, and the Bitcoin halving, which made it much more difficult to mine BTC. Due to more challenging socioeconomic reasons and disasters such the Terra Luna implosion and the fall of FTX, ETH's dominance has dropped to roughly 19.32% as of February 1, 2023.
You may have heard of Bitcoin being referred to as "digital gold" if you follow the crypto market. Crypto investors frequently go to Bitcoin as a safe haven from the wild price swings in the cryptocurrency markets as altcoins are shook by volatility. Many people are now referring to Ethereum as "digital oil" because of its position in relation to Bitcoin. Decentralized finance (DeFi) smart contract transactions are primarily powered by Ether, just way the global supply system is fueled by oil (ETH). Users will be required to pay gas costs in ETH to complete any transaction on the NFT marketplace, including staking contract approvals. Every time a user executes one of the aforementioned smart contract transactions, ETH is burned and taken out of circulation thanks to the burning mechanism introduced by the London hard fork. When weighing the merits of several theories on the Flippening's likelihood, Ethereum's practicality stands out as a clear "bull." It is anticipated that the enormous flood of transactions will contribute to increasing Ethereum's market capitalization as more ETH is burned over time as the popularity of the cryptocurrency grows during the next bull run.
A Bitcoin halving, for those who aren't acquainted, is a historic occurrence where the reward for mining Bitcoin is cut in half to preserve scarcity and combat inflation. A comparable halving process exists in Ethereum, much like Bitcoin. The issuance of ETH is predicted to dip by more than 80% over time when Ethereum moves to a proof of stake (PoS) consensus mechanism following Merge. ETH maxis refers to this event as the triple halving since the decrease in supply is comparable to more than three Bitcoin halvings. The London hard fork also modified the gas cost structure in addition to the burning method. In the past, consumers may choose to pay more for a faster transaction. With the EIP-1559 update introduced by the London hard fork, miners now charge a fixed fee for each block mined. As a result, miners will lose out on potential profits by burning ETH. When it comes to operating a validator node on the network after the Merge, Ethereum now has additional criteria. The proof-of-stake (PoS) consensus process uses a system that hands out rewards based on the quantity of assets pledged to the network, as opposed to proof-of-work (PoW) mining, which gives rewards based on who has the more computer capacity. Validators will now need to stake 32 ETH in order for their node to get the rewards of staking as the Beacon Chain has been integrated into the Ethereum mainnet and Ethereum has completed its transition to PoS. A sizeable portion of ETH will be regarded to be taken out of circulation when more validators reserve their ETH for staking.
The Environmental, Social, and Governance (ESG) paradigm is widely used by institutions when deciding how to allocate their capital. It may be highly advantageous for any project to conform to ESG principles in order for institutions to view the investment as low-risk, as institutional money frequently drives crypto price fluctuations. Bitcoin, however, does not meet the criteria of many ESG areas. The risks are too high for investors to warrant a big BTC investment, from PoW mining being seen as environmentally damaging to Bitcoin's decentralized governance. Ethereum, on the other hand, conforms to the ESG standards in a number of areas, including the existence of a central Ethereum Foundation that can be consulted, a coordinated governance process that permits regular updates, and a consensus method like PoS that lowers Ethereum's emission levels.
It's crucial to consider the bear scenarios of a crypto project in order to accurately assess its long-term potential.
After all, who will oversee that entity's power if it controls everything? Vitalik Buterin is the main person credited with making Ethereum successful. Buterin's humble demeanor and his aspirational basic ideals for Ethereum, which he still adheres to despite Ethereum's spectacular success, have earned him the majority of the accolades. Although Buterin's notoriety is excellent for Ethereum, it might potentially backfire on the project. The same can be true about Ethereum, since Buterin's regular addresses and interviews strengthen Ethereum's legitimacy, much to how Elon Musk's actions affect Tesla, for better or worse. The price of Ethereum would likely drop if something happened to Buterin because of concerns about the network's future without him at the helm. Bitcoin, on the other hand, lacks a comparable statistic because Satoshi Nakamoto's identity has remained shrouded in mystery after years of investigation. Bitcoin's anonymous feature is helpful for decentralization and also shields the currency from being shaken by unfavorable founder news.
Smart money investors might seek to exchange-traded funds (ETFs) to purchase crypto and sidestep the laws that prevent them from directly investing in Bitcoin in order to expand their total exposure to crypto. Bitcoin is in a better position in this sense than other crypto spot ETFs because there aren't any that have been officially licensed yet. If a Bitcoin spot ETF is established, the enormous inflows from institutions might drive up the price of Bitcoin to the point where it diverges significantly from Ethereum's market size. We're not too far away from a future in which institutions can freely increase their exposure to digital currency via exchange spot ETFs, with funds like Samsung Asset Management attempting to launch a spot Bitcoin ETF on the Hong Kong exchange and Ark and 21Shares attempting to get their spot Bitcoin ETF approved.
Even while we can't predict how the Flippening will affect the crypto market, we can predict how Bitcoin will be affected if Ethereum ends up having a larger market value than Bitcoin. There won't be a "zero Bitcoin" situation, despite what many fearmongers would have you believe. Instead, the most likely outcome is that Bitcoin, despite losing its top spot, continues to be a vital asset in the crypto ecosystem. The fact that Ethereum has overtaken Bitcoin's market value will not change the reality that Bitcoin is the safest payment network with thousands of nodes throughout the world. Bitcoin is likely to maintain its status as the most popular cryptocurrency and the label of "digital gold" because it excels at a use case that other cryptocurrencies don't.
With each successful Ethereum network upgrade, the Flippening appears to become a more and more realistic scenario. ETH has now surpassed more than a third of Bitcoin's market valuation, despite the fact that the post-Merge Ethereum is just 55% complete. With the completion of the Ethereum roadmap and the return of the bull market, we'll likely see Ethereum make another push at the top spot as the bull market rattles up the values of all current crypto assets. We provide a wide range of trading and investment instruments, including the ETH/USDT Spot Trading pair and ETHUSDT Perpetual Contracts, as well as leveraged long ETH and short ETH tokens.
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