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The Crypto Flippening: Can Ethereum Beat Bitcoin in the Years Ahead?

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The world’s second-largest crypto asset in market valuation, Ethereum (ETH), has seen significant gains during the last few months. And the term "flippening" refers to the moment Ethereum hypothetically overtakes Bitcoin (BTC) as the biggest cryptocurrency.

The debate over flippening intensified after Bitcoin’s dominance slid to the 40% range this year and Ethereum jumped to overtake nearly 20% of the $2.21 trillion crypto economy.

At 100% they both have the same market capitalization. Even though market cap is the main metric to determine "The Flippening,” there are a number of other metrics that can be observed. 

the flippening crypto

Ethereum has already been passed Bitcoin on several fronts this year amid its incredible network value. Ethereum’s one-month forward contract is also trading at a significantly higher premium than Bitcoin, signifying bullishness and increasing smart money inflow.

Ethereum’s price has more than doubled since mid-July but market analysts like Benjamin Cowen, who has 522,000 YouTube subscribers, think it's just getting started. Many other analysts have also upped their price targets in the range of $10,000 for 2021.  

Digital asset investment company Magnetic's Co-Founder Megan Kaspar, who accurately predicted that Ethereum price would triple to surpass $3,000 back in January, now says Ethereum price will spike to the $10,000 level this year.

"The shift to proof of stake for block validation reduces carbon emissions by 99.9%, making Ethereum a green technology," Kaspar told Yahoo Finance. "So these two updates on the network alone could push Ethereum to a trillion-dollar market cap which is where bitcoin is at today — that would make Ethereum around $8,000 to $10,000 a coin.”

Network scalability, smart contract features and the inflow of smart money are some of the reasons why Ethereum is gaining attention from investors. 

Growing DeFi demand is the biggest catalyst

The fast-growing Decentralized Finance (DeFi) market, which has been close to $200 billion in total value locked, is one of the major reasons why the second-largest cryptocurrency has been growing.

Although other networks such as Binance Smart Chain, Solana, Terra and Polygon are gaining market share in the DeFi sphere, Ethereum still holds majority share with around $130.07 billion.

The number of DeFi users or unique addresses across Ethereum-based DeFi apps reached 3.3 million, according to Dune Analytics data. The data further reveal that the major chunk of growth is stemming from the decentralized exchange (DEX) platform Uniswap. The DeFi lending applications and yield-based apps are also contributing significantly to the overall growth.

Matthew Roszak, who is the co-founder of the DeFi platform Vesper said that DeFi market will sustain its current growth trend and hit $800 billion in market cap by the end of the next year, a 10-fold growth from the current level.

The NFT craze could make the big difference 

The Ethereum-based NFT marketplace, in particular, has soared in popularity, with almost $3 billion of digital collectibles sold last month alone on OpenSea, a major Ethereum based peer-to-peer NFTs marketplace. This represents a more than 10-fold growth from the prior month.

Despite stunning growth and adoption from numerous industries, the NFT market space is still in its very early stages.

Recently, one of the largest payment technology companies, Visa, entered into the NFT craze by purchasing CryptoPunk for $150,000. Cuy Sheffield, Visa's head of crypto, anticipates that NFTs could bring a big change in the future of e-commerce and expects NFT wallet addresses to gain similar importance as the mailing address nowadays.

“NFTs allow a small business to harness a public blockchain to create digital goods, which can be delivered instantly to a crypto wallet anywhere in the world,” Sheffield added.

Network upgrades, innovation and scalability

The bull run in Ethereum price is also attributed to its scalability and network upgrades.

The latest upgrade dubbed as ‘London hard fork’, which founder Vitalik Buterin says reflects the potential of even bigger upgrades in the future, enhanced investors about its scalability and innovation. The upgrade has also created a supply shock, which is potentially boosting the price.

“Since the EIP-1559 upgrade one month ago, over 180,000 $ETH (equal to over $700 million) have been burned, resulting in continued disinflationary pressure on the Ethereum supply,” the Fundstrat crypto said in a note last Friday.

But real dominance could take longer

Goldman Sachs and several analysts expect Ethereum to surpass Bitcoin in the years ahead as they believe Ethereum has the highest real use potential.

At the time of writing, Ethereum is changing hands just around the $3,400 per unit zone and is down over 19% from the coin’s all-time high (ATH).

On May 12, 2021 Ethereum reached a value of $4,356.99 per unit. However, it is up a whopping 819,810.2% since the crypto asset’s low on October 20, 2015, at $0.432979 per ether (six years ago).

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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