Bitcoin and Ethereum are by far the two largest cryptocurrencies by value, although that could change by 2040.
The gigantic 2021 bitcoin price bull run catapulted its market capitalization to over $1.2 trillion last year. Since then, it has plummeted to just $400bn. Meanwhile, Ethereum’s huge price rally saw it surge to over $500 billion before falling to just over $200 billion.
Now, some traders and investors are predicting that Ethereum’s price will surge after The Merge, its long-awaited radical upgrade, potentially making Ethereum more valuable than Bitcoin for the first time, an event known as “the inversion.”
Bitcoin is still around double the market capitalization of Ethereum, but that could be about to change.
“Investor interest in Ethereum has remained resilient as the merger approaches, its once-in-a-lifetime event that will see the entire network migrate to proof-of-stake,” Gabriel Selby, Principal Research Analyst at the provider of CF Benchmarks cryptocurrency indices, he said via Twitter. “Some have suggested that it could be the catalyst for Ethereum to overtake Bitcoin as the world’s largest currency by market cap.”
This week, Ethereum is expected to complete its transition from the energy-intensive proof-of-work consensus mechanism used by bitcoin to the more energy-efficient proof-of-stake, removing miners’ dependency on ethereum and delivering control to those who “participate”. its ether on the network. The change is expected to reduce Ethereum’s carbon emissions by 99%, according to the Ethereum Foundation.
Bitcoin’s dominance, a measure of its value compared to other cryptocurrencies, has fallen below 40% in recent weeks, down from a high of nearly 50% earlier this year, according to data from CoinMarketCap. Ethereum has seen its market share rise to over 20%, from lows of less than 15%.
“Since the beginning of the year, the market capitalization ratio between Bitcoin and Ethereum has converged to its narrowest spread since May 2021. If the current trend continues, ethereum could reach the top of the leaderboards by the end of 2023, or before”. Selby said.
While bitcoin has developed a reputation as digital gold due to its immutability and resistance to both change and censorship, Ethereum is designed to be used as the foundation for a decentralized blockchain-based internet, an idea known as web3.
“With the proliferation of financial products that have allowed a much broader range of investors to voice their opinion on prices in the crypto markets, such as CME’s recently launched Ethereum options contract, mechanisms are in place for capitalization Ethereum’s market share outperforms Bitcoin, should there be a participation of a sufficient number of investors,” added Selby.
Earlier this year, Ethereum co-founder and spiritual leader of the project, Vitalik Buterin, revealed his plans following the “merge” upgrade, with the “increase” to follow in a series of improvements designed to make the network more reliable. more secure and decentralized.
“We think Ethereum has great utility and once the purge phase of pruning the code begins in 2023, it will be a very good blockchain with even higher adoption,” said Martin Hiesboeck, head of blockchain research and cryptocurrencies on cryptocurrency trading platform Uphold, via email, adding: “[Ethereum’s] price could well skyrocket.”
Over the past year, ethereum has seen a boom in demand due to the growing popularity of non-fungible tokens (NFTs), digital art, and tokenized media on the ethereum blockchain.
“Ethereum has already overtaken Bitcoin in terms of the number of transactions executed,” Daniel Kostecki, senior financial analyst at investment company Conotoxia. “However, it still lags far behind Bitcoin in transaction volume on the blockchain or on exchanges.”
Kostecki warned that it will be “difficult to beat a coin that was the world’s first and whose issue is limited.” Although others are more confident that change will eventually happen.
“The merger will help global sentiment towards cryptocurrencies and [the third blockchain-based internet iteration] web3 because the second largest blockchain is getting greener,” said Max Kordek, CEO of decentralized application platform Lisk. , in comments sent by email. “This is also a necessary step for Ethereum to flip Bitcoin, which I anticipate will happen in the next big bull run.”