Can Ethereum Overtake Bitcoin? May’s Crypto Crash Shows It Might Happen

Can Ethereum overtake Bitcoin? May’s crypto crash shows it might happen

By Kiara Sofia Smith
Published on: July 21, 2021

After May’s cryptocurrency crash, Ether’s relative resilience has brought the notion back into focus that the second-largest digital token could one day overtake Bitcoin. In May, one of bitcoin’s worst drops and a small retreat in ether narrowed the gap between the two biggest virtual currencies, by about $350 billion.

Ethereum’s network is being constantly upgraded to increase efficiency, citing Ether’s popularity in blockchain-based financial services and digital collectibles. Ether “will likely exceed Bitcoin at some point in the future, as Ethereum will be superior when it comes to innovation and developer interest,” said Tegan Kline, co-founder of blockchain software company Edge & Node. However she said that investors should make sure they allocate money to both tokens.

Despite the speed of change in the crypto sector, Goldman Sachs Group Inc. strategists and star investor Cathie Wood have recently discussed Ether’s potential. Data from CoinGecko indicates that interest in virtual currencies has expanded beyond Bitcoin. According to CoinGecko, Bitcoin’s share of the $1.6 trillion crypto market is down to 42% from about 70% going into 2021.

Goldman commodity strategists Mikhail Sprogis and Jeff Currie wrote that Bitcoin’s first-mover advantage appears “fragile,” adding there’s a high chance it will “eventually lose its crown as the dominant digital store of value to another cryptocurrency with greater practical use and technological agility.” Ether seems the most likely candidate to surpass Bitcoin, while adding the rider that such an “outcome is far from certain.” Ether’s annual supply growth is capped, they said, aiding its credentials as a store of value.

But, even if Goldman thinks Ether could overtake Bitcoin eventually, neither cryptocurrency will soon replace gold as the most common store of value because of volatility, Goldman said in the note. Will Bitcoin be the new gold?

Growth Story

Pat LaVecchia, the chief executive of crypto broker Oasis Pro Markets LLC, believes Ether is starting to be seen as “a better growth story” in the long run.

In May Bitcoin went down some 37%, one of its worst monthly retreats on record, while Ether shed about 11%. The largest token retreated 1% to $35,750 as of 8:27 a.m. in London. Ether was little changed at $2,447. Virtual currencies have been under pressure after Elon Musk criticized Bitcoin’s energy profile and China stepped up regulatory rhetoric.

Due to the sheer amount of attention it gets, Bitcoin will likely hold off its rivals to remain in the top spot. For instance, Andrew Kiguel, chief executive of Tokens.com, argues Bitcoin has “the best outside validation signals” given how institutions and tycoons like Musk keep talking about it.

Ethereum is up more than 900% over the past year, surpassing Bitcoin’s 275% gain. Given the huge gains, the debate over “the flippening” – where Ether’s value overtakes Bitcoin – will probably remain alive for a long time.

Conclusion

The two cryptocurrencies have different use cases and if Ethereum were to overtake Bitcoin in the next few years, does not mean that Bitcoin is going to die. Bitcoin’s primary use case is to act as a hedge against inflation and Ethereum is not threatening to take that away from Bitcoin. It is possible for Ethereum to eventually overtake Bitcoin’s market cap, however, this will take a few years and the market cap of both of these coins will certainly be in the trillions of US dollars if or when it does happen.

Kiara Sofia Smith

My current focus is blockchain technology and cryptocurrency. One could even call me a blockchain “enthusiast.” I have worked for almost a decade on several financial projects related to the stock market news, fundamental research and technical analysis for several blogs.