Bitcoin price drop. Is Ethereum on track to dethrone the top crypto?
The Bitcoin (CRYPTO: BTC) price is down just over 2% since this time yesterday and is currently trading at US$22,907 (AU$32,680).
Ethereum (CRYPTO: ETH) is also down, with the world’s number two crypto falling 6% in 24 hours to $1,587.
Despite the pullback, both tokens remain significantly up from July 1st levels.
On July 1, the Bitcoin price was at USD 18,763. That means it has gained an impressive 22% since then.
But the Ethereum price has fared far better, charging 56% higher from the $1,013 it was worth on July 1, according to data from CoinMarketCap.
So, can the world’s number two token by market valuation dethrone the world’s first and still largest crypto?
Will there be a “flipping” if the Bitcoin price continues to hang?
In crypto circles, Ethereum’s potential to overtake Bitcoin is known as the flip.
While the last month’s price action narrowed the gap between the two tokens, there remains a large bridge between them.
At the current Bitcoin price, the token has a market value of $438 billion. That compares to a $193 billion market cap for Ethereum.
Whether a turnaround is on the horizon and exactly when it might happen depends on who you ask.
Ethereum fans point out that the upcoming “Merge” is likely to bring strong tailwinds for the crypto.
The merger will see the Ethereum blockchain shift from a proof-of-work to a proof-of-stake protocol. This will significantly reduce the amount of computing power needed to verify transactions, reducing costs and significantly reducing energy use.
The merger is now slated to come to fruition in September after years of delays, with testing ongoing.
Bitcoin is likely to continue using its proof-of-work protocol, which has seen the Bitcoin price come under pressure amid revelations of the massive amount of energy required to maintain the blockchain.
What the experts say
As mentioned above, experts are divided on their views on Ethereum’s takedown of Bitcoin and on the power of the merger.
Quantum Economics CEO Mati Greenspan said (quoted by Bloomberg):
I keep hearing people repeat the question, ‘wen spinning? While there is no guarantee that this will ever happen, it seems like this event is getting closer by the day, just by looking at the numbers.
Joe DiPasquale, CEO of BitBull Capital, is also bullish on the outlook for Ethereum.
“We like Ether and we think it’s a big differentiator,” he said. “Bitcoin has been the hundred pound gorilla, but Ether is really the other hundred pound gorilla. Everything else follows.”
Rounding out the Ethereum bulls is Bodhi Pinkner, an analyst at Arca, who said it is very possible for the number two crypto to unseat Bitcoin. “We have a favorable view of Ethereum,” he said.
Pinker said Ethereum will become a deflationary asset once the merger is complete. “So the changing dynamics theoretically bode well for Ethereum’s price relative to Bitcoin, especially in an environment of tightening.”
Henry Elder, head of decentralized finance at Wave Financial, isn’t convinced we’ll see a turnaround anytime soon.
According to Elder (courtesy of Bloomberg):
The merger is overhyped from an ETH price perspective. It’s an incredibly important technological change for Ethereum, but 99.99% of users won’t notice any difference until months or years later. Meanwhile, the impact of reducing and redistributing issuance will take a while to filter down to ETH prices.
Elder compared the likely impact of the merger to the Bitcoin halving process.
Bitcoin price also tends to increase after the pre-programmed halving dates. These happen every four years and halve the reward for Bitcoin mining. It is meant to be deflationary and maintain scarcity.
However, as Elder pointed out, the impact on the Bitcoin price after a halving may not be seen in the market for months.
“I wouldn’t be surprised to see [Ethereum] “prices are pumping into the consolidation, but I don’t think there’s a sustainable catalyst until the second half of 2023,” Elder said.
