Analysts reveal the conditions under which Etherium could outperform Bitcoin in terms of market capitalisation
Etherium has significantly outperformed Bitcoin in returns over the past few weeks ahead of one of the biggest events in the cryptocurrency’s history – the move to a Proof-of-Stake (PoS) consensus algorithm. This trend is particularly evident in the ETH/BTC trading pair, i.e. the ether to bitcoin trading pair. Still, against BTC, Ether is only 12 percent of the high of the last four years. If ETH can rise to $3,750 and the Bitcoin price stays at about the same level, a so-called flipping will occur. We tell you more about the situation.
As a reminder, flipping is the term used to describe the hypothetical emergence of Etherium at the top of the market in terms of capitalisation among all cryptocurrencies. That has never happened before, and only Bitcoin has ever ranked first.
And with ETH now in the spotlight among investors and traders as the so-called merger approaches, talk about the prospect of Ether coming out on top of the overall coin rankings is becoming clearer.
At the moment, Etherium’s capitalisation is 49 per cent of Bitcoin’s corresponding result
Why ETH Etherium is growing
The chart below shows that Etherium is trading at 0.079 BTC in a pair to Bitcoin. If the altcoin rises almost twice in this trading pair, we can talk about the start of flip-flopping.
Etherium to Bitcoin exchange rate
But, again, for that to happen, the price, and with it the capitalization of Bitcoin, must remain at its current level, which is unlikely to happen given such a strong positive for ETH. However, the cryptocurrency has risen in value by 53 percent in the past month, while BTC has moved up nearly 15 percent. Accordingly, ether is already well ahead of Bitcoin in terms of asset value gains.
Changes in rates of the top cryptocurrencies over the month
According to CryptoSlate sources, the target value of Ether for flipping is currently around $3,750 per coin. That is, according to the criteria described above, the event could happen even if the price of ETH does not rise to its all-time high. It was, recall, set at around $4,800 in November 2021.
The red line on the Etherium chart shows the target price for flipping
In the ETH/BTC pair, Etherium hit an all-time high of 0.15 BTC in 2017 – and has been trying to break above 0.1 BTC since February 2018. The news that the upcoming merger has finally received a final date and should go through without too much trouble has seriously fuelled investor interest in Ether. In the last month alone, it has appreciated by tens of percent in dollar terms, as we have already reported.
ETH price gains in different timeframes today
For clarity, the chart below shows the value of Etherium against the US dollar and Bitcoin simultaneously – with two superimposed lines. You can clearly see here that the altcoin is growing faster against Bitcoin than against the dollar.
Bitcoin and Etherium price comparison
Also recently, Etherium’s share of the total capitalization of the crypto market has increased significantly. At the time of writing, it has reached highs from December 2021.
Bitcoin and Etherium market shares
In terms of the number of active addresses, however, Ether has already surpassed Bitcoin by a wide margin. This is shown in the chart below, where the green line shows the number of active Etherium addresses and the red line is the same for Bitcoin. The grey line represents the Bitcoin price.
Comparison of the number of active Bitcoin and Etherium addresses
The situation is similar for the number of transactions in the network of both cryptocurrencies. Here, Ether took the lead in mid-August.
Comparison of the number of transactions in Bitcoin and Etherium
However, one indicator may suggest that the upward trend in Ether may not be long-lasting. Over the past few months, the amount of ETH on exchanges has increased, while the volume of BTC, on the contrary, has decreased significantly. The theory is that there are now too many traders willing to speculate quickly on the price of ETH. And that creates room for related trades.
The balance of BTC and ETH on cryptocurrencies
We believe that sooner or later, Etherium will still be able to surpass Bitcoin in terms of market capitalization. Right now, ETH lags behind BTC by about two times, which is an acceptable difference. In addition, the prospect of a successful transition of the Etherium network to Proof-of-Stake will bring a lot of attention to the coin, as well as improve its reputation as a project that consumes fewer resources and is not so noticeably harmful to the environment. Well, Vitalik Buterin's blockchain capabilities have long bypassed BTC use cases. So, the conditions for that very flipping are quite sufficient today.
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