Can it happen? How? And what could that mean for crypto?
- The fluctuation is unlikely in terms of market value, but still possible.
- The reversal can also refer to various statistics such as daily trading and transaction volume, as well as other areas.
- A reversal can impact the broader crypto ecosystem in different ways.
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It sounds like the name of an obscure horror movie, but “the flippening” is something that continues to generate a lot of debate in crypto circles. Actually, now it Ethereum (ETH) is close to its long-awaited transition to proof-of-stakehas started to attract more attention than ever before, especially due to claims that ETH will become a deflationary asset after this shift.
This is certainly a contentious issue, especially when the “flipping” can mean more than one thing. Nevertheless, there is general agreement that ETH will turn around bitcoin (BTC) on at least some metrics, although there is much disagreement as to whether it will become more valuable in terms of market cap.
At the same time, commentators tend to agree that even if the reversal happens (at least in some respects), it will not diminish BTC’s current status as a store of value.
The flipping: what does it really mean?
“The notion of ethereum ‘flipping’ bitcoin has been around since at least 2017. In the original sense, it meant that ethereum would become the number one cryptocurrency on coin ranking sites such as CoinMarketCap“, said Josef Tetek, brand ambassador at SatoshiLabs and Trezor.
In this sense, ETH needs to reach a price of 0.156 BTC per unit to overturn its rival, although at the time of writing it is at around 0.0774 BTC. This means that ETH should more than double in price while the price of BTC should stay at the same level. Given this gap, Tetek sticks his neck out and says he doesn’t think a turnaround in this sense will “ever” happen.
“Ethereum briefly touched a price level of ~0.14 bitcoin in June 2017 and has posted lower highs since then,” he shared Cryptonews.com.
Other industry figures have a more mixed view. That is, they think the reversal is unlikely in terms of market value, but still possible.
“Some say that because ethereum will be deflationary after the merger, it will then have the same characteristic of scarcity that caused bitcoin to soar – AND because, in addition, ethereum also actually has utility as a gas for a settlement layer – these two things combined will make ethereum more more valuable than bitcoin in the end,” said boolean fund general partner Mark Jeffrey.
For Jeffrey, there is a chance that post-merger Ethereum will become the primary “cash-like” settlement layer for much of the crypto ecosystem.
“But it’s still far from a done deal – Ethereum is still slow and unscalable and has a year or two to catch up Avalanche, GDP [chain], SolanaFantom and others that are fast, cheap, scalable and here now,” he shared Cryptonews.com.
That said, “flipping” doesn’t necessarily mean that ethereum is overtaking bitcoin in terms of market cap. As Polygon (MATIC)an Ethereum scaling platform, co-founder Mihailo Bjelic explains, it can also refer to various statistics such as daily trading and transaction volume, as well as other areas.
“Recently, ether overturned bitcoin in the options market for the first time, reaching a total of USD 5.7 billion in open contracts against bitcoin’s USD 4.3 billion. This shows that ETH is apparently becoming a more popular trading tool than BTC,” he said Cryptonews.com.
Bjelic also suggests that ethereum will only gain momentum after the merger, which means we’ll eventually have to update our notions of what’s possible.
“Additionally, Ethereum may well overturn Bitcoin in terms of its prominence and importance to the industry. Bitcoin is the project that started the industry and as such is incredibly significant, but the astonishing level of innovation, use cases and adoption happening in Ethereum could easily make it the flagship project and the first association when our industry is mentioned,” he added.
What will happen to Bitcoin if Ethereum takes it over?
Assuming that Ethereum flips Bitcoin in a different way, how will this affect the latter? Will any reversal somehow affect BTC’s value or status?
“It would be about Ethereum becoming more valuable, and not diminishing Bitcoin,” argued Mark Jeffrey, who added that both cryptoassets/platforms serve two very different economic functions.
“Bitcoins proof of work will always retain the very highest degree of impermeability and security. It could become increasingly valuable in the coming years – that should not be underestimated, he said.
Mihailo Bjelic agrees with this analysis, affirming that Bitcoin’s intrinsic value lies in its potential to be a quasi-gold standard and store of value.
“At the same time, Ethereum acts as the backbone of Web3which supports DeFi and NFT ecosystems, among others, which include many interconnected platforms. So this is more about Ethereum increasing in value rather than Bitcoin losing its own,” he said.
Josef Tetek has a stronger view in Bitcoin’s favor, especially as Ethereum will soon move to proof-of-stake, which in his view is not as robust as proof-of-work.
“I do not believe Ethereum is sufficiently decentralized to remain neutral and permissionless – and I fear that its upcoming transition to a proof-of-stake consensus mechanism will make it even more vulnerable to a regulatory capture, as the stakes appear to be concentrated among a handful of institutions, he said.
Effect on the wider crypto ecosystem
While a reversal might not really hurt Bitcoin’s position and its inherent value proposition, it could have an impact on the broader crypto ecosystem in different ways.
“I don’t think any kind of flipping would ‘harm’ crypto, but it might reduce the appeal of competing tier-1s [base protocols], i.e. Ethereum competitors. A possible change in focus would be to take cryptocurrency from a single popular use case to a variety of use cases such as Ethereum and solutions that Polygon can support, says Mihailo Bjelic, who claims that such a shift will be very beneficial for the industry.
Mark Jeffrey also says that any kind of reversal will be a net positive for crypto, as it will ultimately mean that Ethereum has attracted more use and adoption. And given that the crypto market tends to rise and fall more or less as a whole, that’s likely to increase usage and adoption across the board.
He says: “Any crypto ecosystem that succeeds wildly is good everywhere – it only increases adoption and innovation. Some parties will always value bitcoin’s better security – as ethereum is more widespread, some percentage will always take their winnings and store them in native bitcoin for increased Safety.”
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Learn more:
– Analysts advise Ethereum users to avoid transactions on the day of the merger, outlining a number of risks
– No “black and white” answer to the question Proof-of-Work vs. Proof-of-Stake, says the Kraken
– Major bitcoin and crypto companies warn of ‘extreme’ risks in proof-of-stake systems
– The trade-offs and benefits of switching Ethereum to a Proof-of-Stake network
– ‘PoS fanatics who attack PoW are actual supervillains’, says Krakens Powell as US politicians accuse
– Ripple’s Exec campaign has ‘zero chance’ of forcing Bitcoin into proof-of-stake, but prepare for more attacks
– A closer look at the environmental impact of Bitcoin mining
– Top stories about Ethereum and its merger with its proof-of-stake lighthouse
– Ethereum’s merger may reduce demand for Bitcoin, but regulatory and technical challenges remain
