Can Ethereum Overtake Bitcoin?

Bitcoin has been the biggest cryptocurrency by market capitalization. Recently, it has been losing dominance significantly, leading to a discussion as to whether Bitcoin might lose its spot as having the highest market capitalization in the crypto space. With several opinions floating around, most analysts and investors are lending their support to Etherium, which has acquired the label – “Bitcoin killer.” So, is it possible for Bitcoin to lose its dominance over Ethereum?

Analysts and Investors Believe in Ethereum

Bitcoin has been long thought of as a cryptocurrency that will remain the most capitalized forever. Even though there have been many arguments against it, such as its high transaction costs, mining impact on the environment, or the fact that it was first, which means that it can be improved, Bitcoin still holds its position pretty strongly. In approximately 12 years of cryptocurrency history,  there has not been any coin that would at any point have higher capitalization than Bitcoin. But, as the sentiment in many areas of the cryptocurrency market is showing, we might be slowly heading to times when even the position of Bitcoin as the TOP  crypto currency, might be in jeopardy due to several reasons.

Altcoin Season and Falling Dominance

According to Tradingviews calculations, the dominance of the biggest cryptocurrency has been steadily declining from the beginning of the year. From its highs, of around 73% during the first week of January, the dominance is steadily falling. Its current levels are around 40%, which means that Bitcoins´ dominance is slowly approaching the all-time lows of approximately 35%, This was seen in the previous bull market (beginning of 2018).

Source: Tradingview.com

However, it should be noted that this type of phenomenon occurs during each cryptocurrency bull market, and is generally known as altcoin season. The alt season is known as an event or a period in the cryptocurrency markets, where most large altcoins gain momentum, causing their price to rise more rapidly than the price of Bitcoin. Usually, in these times, the dominance of Bitcoin is called into question. This has been the case also in recent weeks.

However, this time, Ethereum has been gaining more and more of the market share and its price has increased by more than 300% from this year, with the current ATH sitting at around 4 500 dollars. The same applies to the trading pair of these two cryptocurrencies (ETH/BTC), where Ethereum is slowly “attacking” the 0.1 marks, with the ATH at 0.156 since June 2017. Moreover, we have not seen the current price level of this trading pair in more than 3 years, which again shows, how good the situation looks for Ethereum.

Source: Tradingview.com

Support of Many Analysts and Investors

As expected, this has caught the attention of many analysts, industry professionals, or investors. Many of them started to believe that Ethereum has what it takes to dethrone Bitcoin to become the biggest cryptocurrency in the market. They, however, have different reasons as to why they believe it will happen, so we decided to introduce at least a few of them.

Ryan Watkins, a cryptocurrency analyst at Messari believes, that Ethereum 2.0, which is a switch from Proof-of-work to Proof-of-stake can bring the biggest changes in the history of cryptocurrencies, with Ethereum flippening Bitcoin being one of them. He for instance said that:

“I think that the shift to Ethereum 2.0 and proof of stake, which is kind of like a new way of securing the Ethereum blockchain may lead to Ethereum being more secure than Bitcoin.”

In support of this are also views of investing legend, Ray Dalio. The founder of one of the biggest hedge funds in the world, Bridgewater Associates, expressed his opinions mainly on the dominance of Bitcoin earlier in January, where he explained that he thinks that Bitcoin will be dethroned as the biggest cryptocurrency. He did not back up this with any specific statistics or indicators, but he did state that this is simply how evolution works and added that there will be better alternatives invented.

The same opinion is supported by Peter Schiff, probably the most famous gold bug and supporter of the most precious metal, who is also known as the “crypto-hater.” He has shared his views on cryptocurrencies on many occasions, but mainly from a negative perspective. Peter Shiff does not support the idea of the “Digital Gold” which explains why he finds fault in Bitcoin is it is often referred to as the digital gold.

Whether he is serious or jokingly, he said in his recent tweet that there are better chances for Ethereum to flip Bitcoin than for Bitcoin to flip gold. However, his comments on this subject matter might be questioned, since, as mentioned previously, he is one of its biggest opponents.

Source: Twitter.com

The debate about Ethereum flippening Bitcoin has the views and opinions of other professionals. But not all of them are as decisive as the above-mentioned ones. As pointed out by Mark Cuban, famous billionaire and owner of NBA team Dallas Mavericks, Bitcoin and Ethereum are essentially different projects and can definitely coexist together.

“Right now, bitcoin is a more established store of value and there is no reason to think that it will not continue to be for a long time. Ethereum, on the other hand, is booming with development that I think will create so many new applications.”

This, however, does not mean that Mark Cuban does not have his favorite when comparing these two cryptocurrencies. He expressed his opinions for CNBC, which showed that he favored Ethereum over Bitcoin for the following reasons.

“The utilisation of Ethereum is much higher. The number of transactions and the diversity of transaction types along with the development efforts in Ethereum dwarf Bitcoin.”

“Apples and Oranges”

As expressed by Mark Cuban, Bitcoin and Ethereum are very different things. Looking at them through the same lens would be a mistake since both of them serve very different purposes. Yes, they are both cryptocurrencies and yes they are both probably the most known. However, their purpose remains different. While Bitcoin still remains the “true digital money of the internet,” Ethereum can be seen as a platform that serves especially as a building block for a decentralized world.

Therefore, two key elements will probably determine whether Ethereum has a chance to ever overcome BItcoin. The first one is a question of Bitcoin and its ability to remain competitive as a store of value or payment option. Its name is forever carved the cryptocurrency history, but, whether it can be connected to the future of cryptocurrency depends on its ability to compete and remain an appealing investment and payment opportunity.

The second question is more concerned about Ethereum, more precisely the world of Decentralized Finance (DeFi). Ethereum is by far the most important platform for the DeFi world. Therefore, if the DeFi truly “infiltrates” the traditional financial world, Ethereum might become the most important building block of the new modern financial world. In that case, it would be very probable that the flippening would happen. However, this would take several years and also would need to be connected to favorable outcomes in many aspects. And whether that happens, only time will tell.