Ethereum
Ether price continues to bleed against Bitcoin. Is the “Flippening” dream over?
The ratio of ether to bitcoin market capitalization hit a multi-year low on Wednesday and has declined overall since The Merge. Will the trend continue?
Since “The Merge” in September 2022, the ETH/BTC ratio has fallen by 45%.
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Posted May 15, 2024 at 2:41 PM EST.
The dream of Ethereum surpassing the market capitalization of Bitcoin, a development known as “Flippening,” seems more distant than ever. The value of Ethereum against bitcoin (ETH/BTC) is at its lowest level in years, having recently fallen to 0.046, its lowest point since February 2021.
Moreover, since Ethereum’s big transition to proof of stake in September 2022, aka “Fusion,“ETH/BTC fell 45%.
Ethereum mainnet activity has also been quiet. Transaction fees, measured in gwei, are at their lowest level in several years due to increased activity moving to layer 2 networks on Ethereum and showing that not much is happening on the network.
Learn more: Why Ethereum Gas Fees Dropped to Their Lowest Level Since 2020
Experts speak out
Even Ryan Sean Adams, co-host of the Bankless podcast and known for being a prominent Ethereum supporter, is starting to have doubts. He recently wrote a job titled “Will This Cycle Ignore Ethereum?” discussing why some investors believe ETH might underperform in the current market cycle. The article describes how Ethereum’s transition to Layer 2 solutions and its “awkward puberty phase” could lead to fragmentation and user frustration, which could cause it to fall behind Bitcoin and other cryptocurrencies during this bull run.
Joe McCann, founder, CEO and CIO of crypto fund Asymmetric, believes that Flippening has always been a dream. He says that while Ethereum has benefited from significant venture capital funding and media attention, its bullish narratives are no longer strong. “Ethereum, as L1, is bound by the laws of physics and, given its architectural design, it simply cannot scale to achieve the throughput and speed needed to be a ‘super computer,’ says McCann . He further claims that Bitcoin remains “ultrasound money,” while Solana has become the “world’s first supercomputer.”
Learn more: Scaling Ethereum with L2s damaged its Tokenomics. Is it possible to repair it?
However, some experts remain hopeful. Connor Loewen, an analyst at Canadian investment firm 3iQ, highlights regulatory and legal developments that could push ETH/BTC higher. He notes that Ethereum dominates the issuance of fiat-backed stablecoins, with over $80 billion issued on its mainnet and scaling solutions. And positive stablecoin legislation could have a significant impact on Ethereum’s valuation. “We view Ethereum as the network best suited to amplify the role of the US dollar within the broader crypto ecosystem in the near term,” Loewen said.
Alex Kruger, founder of consulting firm Asgard, presents two scenarios for ETH: one in which regulatory clarity and potential ETF approvals could drive prices higher, and another in which a rejection could lead to a decline in the short term before a rebound. Kruger believes the first scenario is more likely, suggesting the market is ready for a possible turnaround.
Learn more: Why Spot Ether ETFs will likely have to wait until after the presidential election to be approved
Joe Di Pasquale, CEO of BitBull Capital, also sees a brighter future for Ethereum. He highlights Ethereum’s unique features, such as its proof-of-stake mechanism and smart contract capabilities, that make it an attractive platform for decentralized applications. Di Pasquale also notes historical trends where bitcoin initially rises faster after the market crash, but Ethereum and other altcoins catch up and often outperform in subsequent years.
Many Ethereum believers have been eagerly hoping for Flippening, but with these recent trends, it seems that dream may be slipping away. However, differing opinions from industry experts suggest that Ethereum’s journey is far from over.
For now, bitcoin remains the king of the cryptocurrency world. Ethereum still has a lot to prove if it wants to take the crown.