Bitcoin, the world’s largest cryptocurrency has always reigned supreme in the land of digital assets. But now, thanks to an eye-popping appearance by Ether, supporters of the No. 2 token by market value are raising the specter that it will one day take over the throne.
Bitcoin, the world’s largest cryptocurrency has always reigned supreme in the land of digital assets. But now, thanks to an eye-popping appearance by Ether, supporters of the No. 2 token by market value are raising the specter that it will one day take over the throne.
In crypto parlance, it’s known as a “reversal” — and can still be bypassed if it happens. At around $210 billion, Ether’s market cap is less than half that of Bitcoin, with Ether up 50% in the past month. However, believers are buoyed by renewed optimism as the milestone approaches — perhaps sooner rather than later.
Quantum Economics founder and CEO Matty Greenspan, using crypto-slang employed by the market faithful, wrote in a memo: “People ‘wen flipping?’ I hear you repeat the question. Although there is no guarantee that this will happen, looking at the numbers, this event seems to be getting closer in the day.
Ethereum’s enhancements have made the blockchain a better version of Bitcoin since it was conceived by programmer Vitalik Buterin in 2014 and launched a year later. The Bitcoin White Paper
Optimism over Ether’s long-awaited software upgrade has increased in recent weeks, which would facilitate the transition from the current system of using miners to using more energy-efficient coins. The transition to this screening system is expected to take place in September after being put on the road for several years. Ethereum developers have recently shown continued progress in testing the new system, and are holding a series of events for stakeholders and other community members in the coming weeks.
QCP, the crypto trading store, said that in the past days its desk has traded “incredible amounts” of Ether call options, adding that hedge funds were the biggest buyers. “We expect this demand to continue as we approach the merger in September,” he said in a Telegram market update.
Ether has gained roughly 50% since mid-June, and Ethereum-linked assets have also seen growth. Uniswap, the most popular decentralized crypto exchange on Ethereum, jumped 70% last month, data compiled by Bloomberg show. Meanwhile, Bitcoin’s dominance has shrunk to 40% of the market, down from 70% in January of last year, according to CoinMarketCap.
“We like Ether, and we think it’s a key differentiator,” said Joe DiPasquale, CEO of Bitbull Capital, which manages cryptocurrency hedge funds. “Bitcoin was the hundred-pound gorilla, but Ether is really the other hundred-pound gorilla. Everything else is going backwards. His company owns Ether and has been buying the coin as it rises from $1,000 to $1,500,” DiPasquale added to his position last week.
“A flip is very possible,” said Bodie Pinkner, an analyst at crypto asset manager Arca. “We have a positive outlook for Ethereum,” he said, which, following the merger, will be a depreciated asset. “So volatility could theoretically bode well for Ethereum’s price relative to Bitcoin, especially in a tightening environment.”
Certainly, this is not a new development. The crypto community has long been looking for signs that Bitcoin’s dominance may be waning as other projects and tokens emerge. And while work on the merger has been going on for years, it has often been delayed. It was expected to be held in June at the latest, but it was delayed again.
“The merger itself is a very risky event and any number of things can go wrong,” says Quantum Greenspan. “As in the markets, higher risk can equate to higher returns. And because it’s smooth and safe, they don’t call it risk.”
Henry Elder, head of decentralized finance at Wave Financial, agrees.
“The combination is too high from an ETH price point of view,” he said. “It’s an incredibly important technology change for Ethereum, but 99.99% of users won’t notice any difference months or years from now. Meanwhile, the effects of reduced supply and reallocations will take time to filter through to ETH prices.”
It points to the Bitcoin halving process, which is a pre-programmed update that reduces Bitcoin rewards every four years or so. The impact of such an event can take months to be felt in the market, he said.
“I wouldn’t be surprised to see prices go into consolidation, but I don’t think it’s a sustained boost until the second half of 2023,” Elder said.
