Cryptoverse: Ether goes after Bitcoin’s heels in the race for the crypto crown

Souvenir tokens representing the Bitcoin cryptocurrency and the Ethereum network, with its native token Ether, dip in water in this illustration taken May 17, 2022. REUTERS/Dado Ruvic/Illustration

Sep 13 (Reuters) – For years, ether could hardly dream of challenging its big brother bitcoin. Now his ambitions may be becoming more realistic.

The second-largest cryptocurrency is taking market share from bitcoin ahead of a massive “Merge” software upgrade that could significantly reduce the power consumption of its Ethereum blockchain, if developers are successful in the coming days.

Bitcoin’s dominance, or its share of the crypto market’s market value, has slipped to 39.1% from this year’s peak of 47.5% in mid-June, according to data platform CoinMarketCap. Ether, on the other hand, went from 16% to 20.5%.

The upstart is still a long way from overtaking bitcoin as the No. 1 cryptocurrency, a reversal known to aficionados as the “turnaround.” It is made up of land, however; in January 2021, bitcoin reigned supreme at 72%, while ether occupied a paltry 10%.

As for price, one ether is now worth 0.082 bitcoin, near December 2021 highs and significantly above the 2022 low of 0.049 in June.

“People now basically see Ethereum as a safe asset because they’ve seen the success of the network, they think it’s not going anywhere,” said Joseph Edwards, chief financial strategist at fund management firm Solrise Finance. .

“There is a permanence to how Ethereum is perceived in the crypto ecosystem.”

CRYPTO CAPRICIOUS

The merger, which is expected to take place on Thursday after several delays, could lead to wider use of blockchain, potentially boosting the price of ether – although nothing is certain in a fickle crypto market. Read more

Ethereum forms the backbone of much of the “Web3” vision of an internet where crypto takes center stage, powering applications involving crypto offshoots such as decentralized finance and non-fungible tokens – well that this much publicized dream is still not realized.

Both bitcoin and ether have nearly halved this year on concerns about oversized central bank interest rate hikes. Nevertheless, investors seem to like the look of the merger, with a rise of more than 65% since the end of June. Bitcoin has barely moved over the same period.

“We’re going to see the appeal (of ether) for some investors concerned about energy consumption,” said Doug Schwenk, CEO of Digital Asset Research, although he warned that ether was still far behind the bitcoins.

THE KING IS STRONG

Bitcoin’s waning dominance in the current crypto bear market is a departure from previous market cycles when investors sold lesser tokens – “altcoins” – in favor of the more liquid and reliable bitcoin.

Dethroning the king is no small feat, however.

Bitcoin remains by far the most well-known cryptocurrency. Traditional investors who have dipped their toes into the crypto market since 2020 have tended to turn to bitcoin first, as the most liquid and widely traded token.

Its $427 billion market capitalization is still more than double Ether’s $210 billion, and market participants strongly believe that the original digital coin remains the gold standard in crypto due to its limited supply.

Some market participants claim that bitcoin’s hold on the crypto crown is still strong, even if it has to accept other suitors. For example, Hugo Xavier, CEO of K2 Trading Partners, said his dominance could improve to 50%-60% if the crypto market turns bullish, but he is unlikely to touch 70% again.

Reporting by Medha Singh and Lisa Pauline Mattackal in Bengaluru; Editing by Tom Wilson and Pravin Char

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