Now that Ethereum is back on track again, could it flip Bitcoin's market cap?

Now that Ethereum is back on track again, could it flip Bitcoin’s market cap?

Ethereum hit a bull period after the Shanghai update. The upgrade was completed successfully, enabling investors to withdraw the funds they staked in the period preceding the Merge. Some crypto pundits feared that the event could have a negative effect on ETH’s price because investors would flood the market with new coins. However, it seems like the upgrade was beneficial for the altcoin; its price climbed steadily since its completion. 

It’s essential to note that Ethereum wasn’t the only cryptocurrency with a positive trajectory over the first months of 2023; Bitcoin and the other digital currencies also registered spikes in their values. Investors turned to exchange platforms like Binance to buy Ethereum with credit card and take advantage of the accessible prices before the Altcoin’s value spikes again. 

When it comes to investing in digital assets like cryptocurrencies, two projects usually lead the conversation: Ethereum and Bitcoin. Considering they’re the two top cryptocurrencies in the sector, it’s fair to wonder if Ethereum – the largest altcoin by market cap – will surpass Bitcoin – the largest cryptocurrency by market cap – after it executed the Merge and Shanghai updates without a hitch. The two accomplishments have caused rampant speculation regarding Ethereum’s status in terms of market capitalization because it could become the most functional blockchain in the crypto environment. So, is it wrong to state that the momentum will carry it forward and make the Flippening a reality?

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Let’s discover Bitcoin and Ethereum purposes to fully understand if the Flippening is possible

The Flippening has long been predicted, but to determine if Ethereum has a shot to surpass Bitcoin, it’s crucial to understand the trajectory of both digital currencies. They might both be cryptocurrencies, but they have different purposes and follow distinct paths. 

Bitcoin was created to become a strong form of money that gives control and ownership back to the users. It aims to become a store of value and overtake gold by growing into the world’s reserve asset. However, since its introduction on the market, it has struggled to achieve its purpose because it has to go directly against governments, which is quite complex. 

Ethereum is the altcoin that challenges Bitcoin’s capabilities and aims to become a new world computer that enables the development of digital tools. It offers ownership of data to blockchain users and can be used as a means of access to Web3 and DeFi. However, its most significant feature is the smart contracts utility which removes the need for third parties in transactions. Those using smart contracts don’t have to engage with corrupt organizations or banks when selling or purchasing digital products. The contract is written following a code, and no one can interfere with it. 

Both blockchains have ambitious goals and serve society in distinct ways, so people would get better benefits if they succeed both in achieving their purposes. 

Tokenmonics could make a difference

Crypto specialists list tokenmonics among the most important factors determining if Ethereum will flip Bitcoin in terms of market cap. In this context, it’s worth mentioning that ETH implemented EIP-1559 and completed the Merge, which allowed it to move from the proof-of-work to the proof-of-stake chain. These upgrades enabled the digital currency to reduce its inflation rate by over 90%. Ethereum coins are burned during each transaction, and the network turns deflationary during peak use times. After Ethereum switched to a more sustainable consensus, it got rid of one of the main factors that kept its price downward. ETH miners no longer have to sell coins to remain profitable, which could significantly impact ETH prices. 

Let’s remember that Ethereum completed the merge during the worst stages of the bear market, so it still has to see its consequences. 

Bitcoin is the first digital currency, and its tokenomics are the strongest in the sector. Ethereum’s issuance rate is constantly changing, and no one can tell for sure the exact number of tokens available in circulation. Bitcoin’s issuance rate has always been known because Satoshi Nakamoto revealed since its creation how many Bitcoins will ever be minted and how many are issued by each block. Bitcoin also has halving events that cut the issuance rate in half and help investors predict market movements. 

Use cases

As mentioned earlier, Bitcoin’s main use case is digital money and a store of value. However, the blockchain has to keep up with the sector’s requirements, and its use cases could change in the future if the public asks for it. Ethereum was developed to solve all the drawbacks of Bitcoin, so it has several use cases, from Metaverse to smart contracts, NFTs, Web3, and DeFi. And considering that its inflation dropped over the last period, it can also work as a store of value, so it’s a worthy competitor for Bitcoin. 

Speed of development

A significant factor that directly impacts cryptocurrencies price evolution is the speed of development of blockchain. Bitcoin is known for its slow speed of development, but there’s a good reason for it. The primary BTC Layer 1 is described as a complete project, so even if it no longer experiences any changes, it’ll still be able to power Bitcoin’s purpose. 

However, Ethereum is caught in a series of upgrades in the journey of achieving its goals. And even if it doesn’t move as fast as other altcoin projects, it still moves faster than Bitcoin.

Future predictions

Even if the market is still in the bear phase, the future looks incredible for projects like Bitcoin and Ethereum. El Salvador named Bitcoin its legal tender, and other countries are considering joining the trend. If Bitcoin integrates Taro, it could compete with Ethereum in terms of use cases because it would allow token creation, smart contracts and DeFi. 

Ethereum is also undergoing some changes that will propel it among mainstream assets. The latest upgrades allow affordable and fast transactions, and the possibilities and potential of Ethereum are endless. 

Ethereum and Bitcoin could become two of the most searched assets because they offer great returns on investment and anchor one another.