A phrase has developed in the cryptocurrency community to describe a hypothetical scenario where Ethereum overtakes Bitcoin in terms of market capitalisation. This moment is called “the flippening” and many cryptocurrency experts forecast it is an inevitable outcome that will happen in the near future. Bitcoin is currently number one in the world in terms of market capitalisation, with $942billion invested.
Ethereum is number two in the world, with $442billion invested, and surprisingly the Cardano cryptocurrency has recently jumped to third position, with $98billion invested.
Referring to “the flippening”, Will Hamilton, Head of Trading and Research at digital asset management firm TCM Capital spoke to Express.co.uk and said: “It’s my opinion that Ethereum has a very high potential to take over Bitcoin in terms of market cap.”
The crypto expert at TCM Capital added this was because Ethereum’s “monetary policy is now borderline deflationary, with a negative inflation of over 1.4 percent”.
He added: “Post ETH 2.0, we’ll have a very deflationary asset with real world application, as Ethereum is what the majority of the crypto ecosystem is built upon.
“So the value proposition for Ethereum will be two-fold: one: a scarce store of value, and two: real world, commercial application which drives revenue and underlying profits for the companies that sit on top of it.
“Compare that with Bitcoin, which just has that scarcity factor to it and it’s fairly clear which has the greater value proposition.”
Ethereum is being challenged by so called “Ethereum killers”, such as rivals Cardano and Solana, but one crypto expert is still confident that the world’s second largest cryptocurrency will hold its position.
Speaking to Express.co.uk, CEO and Founder of CoinMetro, Kevin Murcko said: “Ethereum is so far ahead, the use of its technology by developers is by far the most advanced.
Whereas Ethereum’s blockchain has been described as a global, decentralised computer that many developers are creating applications for.
Ethereum is at the heart of the revolution in smart contracts and decentralised finance.
Smart contracts are automated legal documents run via a pre-determined algorithm.
Decentralised finance is a revolution in the process of global monetary governance, that cuts out central banks and other intermediaries.
The value of Bitcoin and Ethereum is forecast to appreciate compared to an inflating dollar.
Many experts have forecast the US dollar is set to depreciate due to continued stimulus packages being issued by the Federal Reserve, because of the economic downturn as a result of the coronavirus pandemic.
Mr Hamilton added: “In traditional markets we have seen the Fed come out and voice the possibility of tapering stimulus by September this year.
“Given the amount of debt issued over the last 18 months, any hike to interest rates could spill over into the equity markets and trigger a credit crunch type event.
“In its current fragile state, Morgan Stanley believes a 5 percent drop in the market from current levels could potentially trigger a significant sell off.
“I think it’s unlikely the Fed slows on its stimulus packages.
“It would pose too high a risk for the US economy.
“To give you an indication of how much money is flowing into the system at the moment, global equities, year to date, have recorded $605billion of inflows ($1.01trillion annualised), this is on track to exceed the prior 25 years combined by 40 percent.”
Express.co.uk does not give financial advice. The journalists who worked on this article do not own cryptocurrency.