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Bitcoin’s massive bull run in 2021 catapulted its market capitalization to over $1.2 trillion last year. It has since fallen back to just $400 billion. Meanwhile, Ethereum’s huge price surge took it to over $500 billion before dropping to just over $200 billion.
Now, some traders and investors are predicting that the price of ethereum will rise following its long-awaited drastic upgrade, which could make ethereum more valuable than bitcoin for the first time, an event known as of “reversal”.
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“Investor interest in Ethereum has remained resilient as the merger approaches, its once-in-a-lifetime event that will see the entire network migrate to proof-of-stake,” said Gabriel Selby, principal research analyst at Ethereum. CF Benchmarks, provider of cryptocurrency indices. , said via Twitter. “Some have suggested this could be the catalyst for ethereum to overtake bitcoin as the world’s largest coin by market cap.”
This week, Ethereum is expected to complete its transition from the energy-intensive proof-of-work consensus mechanism used by Bitcoin to the more energy-efficient proof-of-stake, removing Ethereum’s reliance on miners and giving control to those who “participate”. their ether on the network. The change is expected to reduce Ethereum’s carbon emissions by 99%, according to the Ethereum Foundation.
Bitcoin’s dominance, a measure of its value against other cryptocurrencies, has dropped in recent weeks to less than 40%, from a peak of nearly 50% earlier this year, according to data from CoinMarketCap. Ethereum saw its market share climb to over 20% from a low of less than 15%.
“Year-to-date, the market cap ratio between bitcoin and ethereum has converged to its narrowest differential since May 2021. If current trends continue, ethereum could top the charts by the end of 2023. , or sooner,” Selby said.
While bitcoin has developed a reputation as digital gold due to its immutability and resistance to change and censorship, ethereum is designed to be used as the foundation for a decentralized blockchain-based internet, an idea known as the name of web3.
“With the proliferation of financial products that have allowed a much wider range of investors to express their price views in the crypto markets – such as CME’s recently launched Ethereum options contract – the mechanisms are quite made in place for Ethereum’s market capitalization to overtake bitcoin, should there be buy-in from a sufficient number of investors,” Selby added.
Earlier this year, ethereum co-founder and spiritual leader of the project, Vitalik Buterin, revealed his plans for ethereum after the “fusion” upgrade – with the following “push” in a series of improvements designed to make the more secure and decentralized network, followed by the edge, purge and splurge upgrades.
“We believe Ethereum has great utility and once the code pruning purge phase begins in 2023, it will be a very good blockchain with even greater adoption,” said Martin Hiesboeck, Head of blockchain and crypto research on the Uphold crypto trading platform, via email, adding, “The [ethereum] the price may well skyrocket.”
Over the past year, Ethereum has seen a boom in demand due to the growing popularity of non-fungible tokens (NFTs), digital art, and media that are tokenized on the Ethereum blockchain.
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“Ethereum has already overtaken bitcoin in terms of the number of transactions executed,” said Daniel Kostecki, senior financial analyst at investment firm Conotoxia. “However, it still lags far behind bitcoin in terms of blockchain transaction volume or exchange trading.”
Kostecki warned that it will be “difficult to surpass a coin that was the first in the world and has a limited release”. Although others are more confident, the turnaround will eventually happen.
“The merger will help global sentiment towards crypto and [the blockchain-based third iteration of the internet] web3 because the second largest blockchain is getting greener,” Max Kordek, chief executive of decentralized application platform Lisk, said in comments via email. .”