Do You Remember The Previous Crypto Cycle? Most Investors Don’t
Ethereum has established itself as the leading Layer1 blockchain. Solana is its only true rival. However, institutions seem to favor Ethereum as the base layer for a new economy. Its dominance seems set. However, can Ethereum’s dominance reach beyond the altcoin market? Can Ethereum eventually flip Bitcoin? That’s the question many are beginning to contemplate.
If you were involved in Crypto back in 2017 and early 2018, you will remember that something quite significant took place. Ethereum came very close to flipping BTC and laying hold of the Crypto crown. However, it was not the case, as alts began to shed their gains in 2018. BTC reached its peak in December of 2017, while alts continued to rise into 2018 before the crash was triggered. Had alts continued to rally a little longer, the outcome could perhaps have been different.
We are currently well into this cycle, and price action once again suggests ETH could realistically flip BTC. This is only made possible by a strong Altcoin Season. Without it, Ethereum stands very little chance of stealing the crown from BTC. However, given the right environment, Ethereum could surpass BTC in market cap.
Current Crypto Market Cap: What It Reveals About The Next Big Move
The market cap of BTC is currently over $1 trillion, which was last seen in May of this year. As seen in the screenshot below, the actual market cap at the time of writing is $1,115,633,232,323! This is incredibly impressive for a digital network that began with a handful of computers.
ETH, on the other hand, is really not that far off, as it is almost at the half-a-trillion-dollar mark! At the time of writing, the ETH market cap is $446,190,048,825. You can see how a strong Altcoin Season could realistically push Ethereum’s market cap beyond Bitcoin’s.
If you are familiar with altcoin price appreciation against BTC during a bull market, you will understand that this is not really much of an ask. Based on this metric alone, it is extremely likely that this scenario will play out this year or in early 2022! However, a significant development in either camp could change things. This market moves fast, and anything remains a possibility.
Ethereum Development Is Quietly Building Something Bigger
Since Ethereum’s early days, the network has seen significant upgrades and developments. These developments have mostly taken place quite recently, and though most likely priced into the current Ethereum price, I believe they still have a bullish effect on the price.
The most significant being EIP-1559, which went live on the 5th of August this year. What makes this upgrade so important is that it actually changes Ethereum’s monetary policy. EIP-1559 incorporates burning the base fee, creating a deflationary dynamic. This is an important shift for Ethereum, and one that will hopefully help support ETH’s price.
ETH 2.0 staking also has quite a significant amount of ETH locked up in the staking protocol and pools. Currently, almost 7% of the supply is locked in the ETH 2.0 staking protocol. The removal of coins from the circulating supply usually has a bullish effect on price, as supply decreases.
All of these dynamics begin to work in unison and eventually cause the price to rise. There is obviously a lot of excitement regarding ETH being the base layer of a new economy, as well as DeFi and NFTs. However, Ethereum still has its challenges and is not quite ready for the task, in my opinion. It is, however, moving in the right direction.
Don’t Be Shocked If Ethereum Flips Bitcoin This Bull Run
At the end of the day, a lot is going on for ETH, and if you wake up one morning only to find ETH at the number 1 spot, you shouldn’t be that surprised. It may well happen during this bull market. However, if the market experiences another significant crash, it would probably be a short-lived victory. I guess we will have to wait and see. Just remember that it is a strong possibility that should be factored in.
Final Thoughts
Can Ethereum flip Bitcoin? Realistically, yes. However, it is subject to a few dynamics playing out. Essentially, a strong Altcoin Season is the most significant catalyst. However, if bullish events and developments unfold for Bitcoin, it could make it less likely. The arrival of Bitcoin ETFs has clearly had a bullish effect on Bitcoin, reinforcing its dominance. However, there is still the possibility. I believe that the global tokenization of real-world assets will be the catalyst for pushing ETH to the top. I guess we will have to wait and see. See you next time!