Debating the flippening Is Ethereum capable of overtaking Bitcoin

Is the crypto market on the verge of a major shift as Ethereum inches closer to Bitcoin in market cap?
Bitcoin (BTC) and Ethereum (ETH) are the dominant forces in the crypto market, commanding nearly 70% of its total market cap collectively.
Bitcoin has evolved from an innovative idea to a global financial asset, gaining popularity among institutions. As of Feb. 26, BTC’s market cap exceeds $1 trillion.
Companies like MicroStrategy and Tesla have acquired significant amounts of Bitcoin, solidifying its appeal. Furthermore, the recent approval of spot Bitcoin exchange-traded funds (ETFs) by the U.S. Securities and Exchange Commission (SEC) indicates increasing institutional acceptance.
On the other hand, Ethereum emerges as the second-largest player, with a market cap approaching $370 billion. Ethereum’s blockchain technology supports a diverse ecosystem of decentralized applications (dapps).
Additionally, the platform’s transition to a proof-of-stake consensus mechanism through “The Merge” in 2022 represents a significant technological advancement aimed at addressing scalability, energy consumption, and security concerns.
The crypto community has long speculated about a potential event known as “the flippening,” where Ethereum’s market cap surpasses that of Bitcoin. Could Ethereum overtake Bitcoin in the long run?
BTC vs ETH: market cap and dominance
Since its inception in 2009, Bitcoin has maintained its position as the dominant cryptocurrency, leading the market with a market cap that has outpaced its competitors consistently.
Bitcoin’s market cap started at just $1 million in early 2011, but by early 2013, it had reached $1 billion, marking an unprecedented 1000x increase. By the end of 2013, Bitcoin’s market cap exceeded $9 billion.
The year 2017 was pivotal for Bitcoin, with its market cap surging to over $300 billion for the first time. This surge was driven by a frenzy of retail and institutional investments and a growing interest in cryptocurrencies as a new asset class.
However, this rapid growth was not without setbacks. By November 2021, Bitcoin’s market cap had surpassed $1 trillion, only to drop to around $320 billion by December 2022.
In contrast, Ethereum followed a more gradual path. Despite its modest beginnings in 2015, Ethereum quickly established itself among the top five cryptocurrencies by market cap.
In December 2015, while Bitcoin’s market cap exceeded $6 billion, Ethereum’s was a mere $60 million, a significant difference of 100-fold.
The introduction of initial coin offerings (ICOs) in 2017, followed by the subsequent defi and NFT booms, fueled Ethereum’s exponential growth.
By December 2017, Ethereum’s market cap had risen to $73 billion from $60 million in December 2015, showing an impressive 1210x increase. This growth narrowed the ratio between Bitcoin and Ethereum’s market caps to 3.25:1.
BTC vs. ETH market cap dominance
The concept of “Bitcoin dominance” emerged as a crucial metric for assessing the dynamics within the crypto space. Initially exceeding 90%, Bitcoin’s dominance dropped to below 45% by December 2017 as altcoins, led by Ethereum, gained traction. This ratio further narrowed to approximately 2:1 in December 2021, with Bitcoin’s market cap at around $960 billion and Ethereum’s at $483 billion.
As of February 25, the ratio stood at around 2.75:1, with several bullish scenarios for Bitcoin, including the anticipation of the Bitcoin halving in April 2024 and the SEC’s approval of spot BTC ETFs in January 2024, potentially tilting the scales in Bitcoin’s favor in the short term.
Real-world contributions of Bitcoin and Ethereum
Bitcoin and Ethereum have made distinct contributions to the crypto space, each carving out unique use cases and driving innovation in different directions.
Bitcoin’s expanding ecosystem
Bitcoin’s ecosystem has seen significant growth, especially with the introduction of new technologies and platforms.
The launch of spot Bitcoin ETFs in January 2024 is expected to have a substantial impact, enhancing Bitcoin’s accessibility and appeal while strengthening its position in global finance.
Trust Machines reported an increase in Bitcoin use cases in the first quarter of 2023, with developers showing more interest in building on top of Bitcoin. This growth is attributed to the Stacks (STX) blockchain, which enables smart contracts, defi applications, NFTs, and apps directly on Bitcoin, expanding its utility beyond just a store of value.
Ordinals, introduced in January 2023, have added a new dimension to Bitcoin’s use cases by allowing information to be attached directly to individual satoshis through a process called “inscribing.” This innovation has enabled the creation of Bitcoin-native NFTs, evolving Bitcoin’s functionality beyond its original purpose as a digital currency.
Meanwhile, the ECB’s working paper highlights Bitcoin’s significant adoption in Emerging and Developing Economies (EMDEs), where it serves as an investment, a hedge against currency depreciation, and a means to facilitate cross-border transactions.
Ethereum’s diverse utility
Ethereum has been at the forefront of enabling a wide range of dapps, defi platforms, NFTs, and more, thanks to its smart contract capabilities.
While the ability to mint NFTs directly on the Bitcoin blockchain has been a significant development, Ethereum continues to excel in the NFT domain.
Ethereum’s established standards, like ERC-721 and now with Ethscriptions, have made it the preferred platform for NFT creation and trading, offering a more streamlined process compared to Bitcoin’s recent entry into the space.
Moreover, Ethereum is the backbone of the defi sector, facilitating lending, borrowing, and trading through permissionless financial services. According to DefiLlama, as of Feb. 26, Ethereum has a total value locked (TVL) of around $48 billion, the highest among all other chains.
Ethereum has also emerged as the leading blockchain for the tokenization of real-world assets, converting rights to an asset into a digital token on the Ethereum blockchain, enhancing liquidity and accessibility of various asset classes. Citi predicts that tokenization could become a $4 trillion market by 2030.
Can Ethereum overtake Bitcoin in the long run?
While Bitcoin is often seen as digital gold, serving as a secure store of value, Ethereum is likened to digital oil, powering a wide range of applications beyond financial transactions.
Goldman Sachs highlighted Ethereum’s significant “real use potential” in a 2021 analysis, pointing to its foundational role in running applications like defi protocols. This utility positions Ethereum to potentially surpass Bitcoin’s value in the future. However, Goldman’s predictions should be taken with caution, given their track record of inaccuracies.
Jim Cramer of “Mad Money” has also expressed support for Ethereum, citing its widespread use in purchasing NFTs and other digital assets as a reason for its potential dominance over Bitcoin.
Cathie Wood of Ark Invest envisions a future where Ethereum reaches a market cap of $20 trillion by 2030, while also predicting Bitcoin’s price to reach $1 million.
These forecasts suggest that Ethereum’s broad utility could redefine its position relative to Bitcoin.
The road ahead
While speculations about “the flippening” continue, both Bitcoin and Ethereum are likely to coexist and thrive, each serving unique purposes within the broader crypto market.
The potential for Ethereum to surpass Bitcoin in market cap reflects its diverse utility and the growing demand for its technology.
However, Bitcoin’s established status as digital gold and its expanding use cases ensure its ongoing relevance and resilience.
Moving forward, it will be crucial to monitor how these platforms adapt to emerging challenges and opportunities in the pursuit of reshaping money and commerce in the digital era.