Ether is close to unseating the long-entrenched Bitcoin as the biggest cryptocurrency. Bitcoin has been crashing for the last several months, but it received the biggest boost in the form of the upcoming ‘Merge’ software upgrade.
This upgrade, which will significantly cut down energy usage on the Ethereum blockchain, has helped the crypto to close the gap with Bitcoin, which is still way ahead in terms of market share.
According to CoinMarketCap, Bitcoin’s share of the crypto market’s market value has slipped to 39.1 per cent from this year’s peak of 47.5 per cent in mid-June. Ether, on the other hand, has climbed to 20.5 per cent from 16 per cent.
“People are now viewing Ethereum as essentially a safe asset because they’ve seen the success of the network, they think it’s not going anywhere … There’s a permanency to how Ethereum is perceived in the crypto ecosystem,” Joseph Edwards, head of financial strategy at fund management firm Solrise Finance, told Reuters.
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The upstart is still a long way from overtaking bitcoin as the No.1 cryptocurrency, a reversal known to aficionados as “the flippening”. It’s made up ground, though; in January 2021, bitcoin reigned supreme at 72 per cent, while ether occupied a slender 10 per cent.
As for price, one ether is now worth 0.082 bitcoin, near December 2021 highs and sharply above the 2022 low of 0.049 in June.
The Merge, expected to take place on Thursday after several delays, could lead to wider use of the blockchain, potentially boosting ether’s price – although nothing is certain in a capricious crypto market.
Backbone of “Web3” Vision
Ethereum forms the backbone of much of the “Web3” vision of an internet where crypto takes centre stage, powering applications involving crypto offshoots such as decentralised finance and non-fungible tokens – although this much-hyped dream is still unrealised.
Reuters
Bitcoin and ether have both nearly halved this year on concerns about supersized interest rate hikes from central banks. Nonetheless, investors seem to like the look of the Merge, with ether up over 65 per cent since the end of June. Bitcoin has barely budged in the same period.
“We’re going to see (ether’s) attractiveness to some investors who are concerned about energy consumption,” said Doug Schwenk, CEO of Digital Asset Research, although he cautioned that ether was still a long way behind bitcoin.
The diminishing bitcoin dominance in crypto’s current bear market is a departure from previous market cycles when investors sold lesser tokens – “altcoins” – in favor of the more liquid and reliable bitcoin.
Dethroning Bitcoin
Dethroning the king is no easy feat, though.
Bitcoin is still by far the most well-known cryptocurrency. Mainstream investors who have dipped their toes in the crypto market since 2020 have tended to turn first to bitcoin, as the most liquid and widely-traded token.
Its market cap of $427 billion is still more than double Ether’s $210 billion, and market participants firmly believe the original digital coin remains the gold standard in crypto due to its limited supply.
Some market players say bitcoin’s grip on the crypto crown is still strong, even if it has to accept other contenders. For example, Hugo Xavier, CEO of K2 Trading Partners, said its dominance could improve to 50 per cent-60 per cent range if the crypto market turns bullish but it is unlikely to touch 70 per cent again.
