When Ethereum (ETH -6.57%). At recent meetings, it may be a good time to rethink “flipping”. This term (and fun to say as loud as reading and writing) is the moment the Ethereum bull is waiting.Flipping takes place the moment the world’s second most valuable cryptocurrency overtakes market leaders Bitcoin (BTC -6.75%). From the perspective of market capitalization.
Of course, there is no guarantee that the event will occur. Bitcoin will continue to be a brand that every investor knows. The gap between the two digital currencies is also quite large. Bitcoin with a $ 434 billion price tag is more than double the market capitalization of Ethereum at $ 182 billion.
However, Ethereum continues to be the blockchain platform of choice and may be weeks away from historic milestones. Cryptographic traders wouldn’t be surprised if Bitcoin gave market leadership to the nearest peer. Do not turn it over and sleep.
Momentum has recently been on the side of Ethereum. As of Thursday morning, it has increased by 37% in the past week. Bitcoin recovery, on the other hand, is more modest, but still strong at 15%. Ethereum has also tripled Bitcoin’s earnings in the past month. Stretching the timeline a year ago (certainly a good time), even a 23% slide on Ethereum is slightly kinder than a 28% plunge in Bitcoin.
Of course, it takes a lot of time for Ethereum to flip the script over. From here it should rise 139%. And Bitcoin needs to be stationary. It’s hard to understand because the market needs a reason to separate the two major cryptocurrency denominations. When one gathers, the other inchings higher. When an investor’s appetite cools, it tends to cool in both currencies. Both Bitcoin and Ethereum are about 70% off last year’s highs.
If the flipping chatter doesn’t get the same kind of traction as it did a year or two ago, it’s because both ciphers need to triple from here to return to their peak. The bullish case was that Ethereum would pass Bitcoin along the way, rather than passing the ship in a less stimulating market environment.
Why is this baton transit event possible even at this point? Ethereum bulls point out the merger as a catalyst that can push their chosen cipher to the top. Bitcoin and Ethereum are currently relying on the Proof of Work model to generate new tokens. Mining new Bitcoin or Ethereum depends on computing power. This is a secure verification process that has been tested in combat, but it wastes energy resources. Proof of work is a danger signal for critics with environmental problems.
Ethereum has been working on the transition to the Proof of Stake Protocol for the past two years. This is a consensus-based mechanism for verifying new coins, which is popular in many of the faster and more energy efficient cryptocurrencies. Ethereum initially wanted to complete its integration into the Proof of Stakes last year, but it proved to be a daunting task. The can was kicked earlier this year, and Ethereum programmers (for now) tentatively surrounded September 19th as the day of the transition to the Proof of Stakes.
Traders have acknowledged a new date for Ethereum’s surge over the past week, but have seen the deadline pass. There are still concerns that this could be a “news trading” moment, especially if Ethereum continues to rise ahead of the merger.
But this may be the moment when Bitcoin and Ethereum are really separated from each other in terms of market sentiment and momentum. Bitcoin is currently wearing a market capitalization crown because it has raised a flag when it comes to cryptocurrencies. This is an industry standard. Ethereum has risen to second place by raising the bar on blockchain technology that enhances smart contracts that drive functions beyond mere value accumulation and transaction resolution.
Of course, there are many other types of cryptocurrencies, and they have their own strengths. The third digital currency could eventually overtake both Bitcoin and Ethereum to become the leading currency.
But Ethereum is what we are seeing now. It accounts for almost two-thirds of the total value deposited in locked or decentralized finance protocol chains, and there are many small digital currencies to make Ethereum more convenient.
This year there may be no time for flipping, but if the merger goes smoothly and Ethereum stays away from Bitcoin’s current limits, changes in market sentiment will make it a top dog by 2023. There is a possibility of becoming.
Rick Munarriz has positions in Bitcoin and Ethereum. The Motley Fool has positions in Bitcoin and Ethereum and recommends them. The Motley Fool has a disclosure policy.