In such a competitive and emerging space as cryptocurrencies, it is not uncommon for top coins to “compete for the throne” with one another. For example, the story that Ethereum toppled Bitcoin has been around for a long time, but it doesn’t end there. In fact, this issue became more debated after Ethereum’s London hard fork. In the end, however, a new argument was made for a broader view.
Can Ethereum Beat Bitcoin?
DeFi, Web3, Dapp (decentralized application) and NFT are booming markets with the potential to become huge. It can be assumed that one of these huge markets will eventually outperform the market for a global store of value like Bitcoin. Since all of these developments take place on Ethereum, it is also to be expected that the market capitalization of ETH will inevitably surpass that of BTC at some point.
Ethereum has a larger developer community than most of its competitors, and since it also has the advantage of being a pioneer, it is considered more secure for Dapp platforms. However, as the “Ethereum killers” are thriving and the top altcoin is taking some of the market value, many are skeptical that Ethereum will continue to dominate the above categories.
In order for this thesis to be true, Web3, DeFi, Dapp and NFT will certainly only work on Ethereum at some point and ETH will maintain its dominant position. However, it appears that the above argument was drawn from a miscalculation.
Until Ethereum successfully switches to a proof-of-stake model, there is still a high execution risk. Problems such as failed transactions and runs cost users millions of dollars every day and are not uncommon.
In fact, an Ethereum user just recently paid $ 430,000 in transaction fees for a failed payment. Although DeFi is growing rapidly, it has inherent risks that can affect the network.
In addition, the ETH has to compete with the “Ethereum destroyers” on the market and other Altcoins. As recently as last month, Polygon’s active addresses topped Ethereum, and more recently Litecoin.
Although the total value included in Ethereum’s DeFi returned to the ATH region and rose more than 15% to reach $ 110 billion, competitors such as Solana, Avalanche and Polygon have gained relative market share.
Total value blocked by string | The source: Coin98 analysis
ETH has not yet operated independently of Bitcoin
Recently, an Ecoinometrics newsletter mentioned that ETH was turning around BTC and hypothesized yet another that BTC’s market size will reach the same estimated number as gold. In this case, Bitcoin is more likely to grow in the long run, even as a store of value.
In the long term, Bitcoin could be used as security in the global financial system.
The fact that BTC is not exposed to counterparty risk, the supply is limited and everything is verifiable makes it an ideal asset to be used as collateral. In this case, the potential market is expanding significantly while Ethereum is still catching up. Therefore, this hypothesis would invalidate the ETH flipping BTC hypothesis. But that’s not all.
Regardless of the future, ETH is not yet separated from BTC. In fact, the correlation between ETH and BTC is growing very high.
At the time of writing, the correlation between ETH-BTC is 0.94, much higher than leading coins like ADA-BTC, which is only 0.1, according to Cointelegraph. data by IntoTheBlock.
The source: Ecoinometry
Even if the ETH price has grown faster than BTC in this cycle, the ETH / BTC pair is still well below its all-time high since 2017.
Hence, the potential for ETH to flip BTC is far-fetched. However, that doesn’t mean the largest altcoin isn’t going to do well.
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According to AMBCrypto