Ethereum is set to overtake Bitcoin. The so-called flipping of BTC is currently becoming a new narrative for Ethereum. This is currently due to a higher daily trading volume for ETH but based on on-chain data that is currently in favor of the second-largest cryptocurrency by market capitalization.
Back in 2017, the topic of flipping was hotly debated. After Ethereum became an ICO hotbed and experienced a huge adoption surge, there were no stopping investors. ETH was celebrated like the next BTC. This can be clearly observed in the performance of the Ethereum price until the beginning of 2018.
After an exorbitant rise, Ethereum also went into a long bear market. Flipping was suddenly off the table, and investors focused on Bitcoin again. But now, after the current price performance overshadowed the last bear market, people are speculating on flipping again.
This time, the cards are better for Ethereum. In the meantime, ETH is not only about ICOs, but about real decentralized applications, which already dominate the crypto market in the form of Decentralized Finance (DeFi). There are close to $60 billion in various smart contracts on Ethereum, which are mainly available for decentralized trading and lending.
Ethereum is currently in vogue. The smart contract platform offers too many possibilities not to have it on the radar for a possible investment. This is the view of analysts at Goldman Sachs and that of other institutional investors, who are now allocating some of their funds to ETH.
With an ever-growing number of applications on Ethereum’s decentralized network, more and more money is flowing into DeFi. Whether it’s decentralized trading or short-term loans, investors are currently putting their money to work for them on various DeFi platforms.
Moreover, the operations and potential valuation of the various DeFi protocols are far more traceable for traditional investors. Uniswap, for example, generates approximately $10 million in trading fees daily and pays them back to liquidity providers. This means the decentralized application is already generating real revenue that can be used to value UNI’s native cryptocurrency.
In the eyes of major investors, Ethereum has much greater utility than Bitcoin. Moreover, ETH is undergoing a major transformation and will move from proof-of-work to proof-of-stake over the coming months and years. Meanwhile, investors can expect the update to EIP-1559 in July 2021, which could make ETH deflationary.
It’s not just the enticing returns in DeFi that are flushing more and more investors into the Ethereum network. But also the fact that the available supply of ETH will decrease over the next few months.
This is due in part to the update to EIP-1559, where 50% of all transaction fees paid in ETH will be wiped out forever. Previously, that 50% went to Ethereum miners. That would currently be the equivalent of between 6,000–6,500 ETH being removed from the circulating supply every day. This would make Ethereum deflationary in one fell swoop, which should make investors bullish.
In addition, Ethereum is switching to proof-of-stake, and anyone holding at least 32 ETH can stake their coins and search for blocks as well. There will also be staking pools where investors can stake together to increase their chances of finding a block. With such pools, the minimum of 32 ETH will certainly be broken up, and investors can join a pool with as little as 1 ETH and benefit from staking.
Regardless of the potential issue with decentralization, even more ETH will be removed from the circulating supply for a period of time. The combination of reduced supply through EIP-1559 and the introduction of proof-of-stake could result in excess demand and drive the Ethereum price further up.
Whether or not flipping actually happens this time, Ethereum is no competition for Bitcoin. The network takes a completely different approach and cannot compete in terms of security and decentralization. But as the first large decentralized network that has already built a decentralized financial system with smart contracts, ETH currently fulfills the wishes of investors large and small.
This is because transaction fees on Ethereum are only paid in ETH, so-called gas. As a result, the first smart contract platform enjoys demand for ETH from within its own network, which should continue to grow with more adoption. As a result, Ethereum currently generates nearly three times the fees of the Bitcoin network.
In the long run, both networks can coexist and support each other. Bitcoin will forever remain the digital gold that finds strength in its security. Ethereum, on the other hand, is more experimental and accepts trade-offs in exchange for more flexibility. So if you are looking for another candidate in your crypto portfolio, you might find it in Ethereum.
Those who want to pick up new trends have to follow big money, which currently sees more potential in Ethereum than in Bitcoin. Whether ETH will really flip BTC and hold its own in the long run is yet to be seen, but the fundamentals more than giving the potential.
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Source: https://l-wiesflecker.medium.com/ethereum-flips-bitcoin-why-eth-is-currently-so-trendy-dc047ffab1c0?source=rss——-8—————–cryptocurrency
