In 2017, Bitcoin Cash flipped Bitcoin and sent massive panic waves among the Bitcoin maximalists.
While the hardcore fans of Bitcoin kept pounding the table about the Bitcoin being the original and no one taking its place, bitcoin cash community kept propagating the rhetoric that their coin was superior and fulfilled the promise of Satoshi.
This flippening, as it is known in the crypto community, was short-lived.
Bitcoin soon took its reigns back and has not been dethroned from its number 1 position since.
Now, as we head towards another potential bull run, the talks of flippening are intensifying. This time, the contestant is Ethereum.
Can Ethereum flip Bitcoin?
If you think about it, Bitcoin is people’s money while Ethereum is a wall-street’s wet dream.
If successful, a whole ecosystem, the internet of internet, will be built on Ethereum. And, 99% of the general public is not even in it.
Even if a small percentage of traditional banking, stocks, derivative markets get housed on Ethereum network – that itself is enough to send it to the stratosphere.
For crypto folks, a 3x or 5x or 10x does not mean much, however, for those in the wall street who are playing with billions of dollars a 10x is an amazing opportunity.
From its current prices, a 10x Ethereum will be worth $25,000 each token. That put’s Ethereum’s market cap at $2.8 Trillion dollars.
In my personal opinion, Ethereum, IF successful, will do at least 20x. That IF is a big one. There are competitors like Cardano, PolkaDot, Cosmos, etc., who are trying to build ramps to onboard the Ethereum projects onto their network without friction.
If Ethereum does not clean up its act to address the high-fees and transaction speed soon, then it might lose the race.
If it does succeed in fixing these issues then there is no stopping Ethereum.
A 20x scenario would put Ethereum’s market cap just about $5 Trillion dollars.
What does it take Ethereum to flip Bitcoin’s throne?
Bitcoin has to somehow lose its traction and fail as a store of value for Ethereum to flip it.
That is because, if Bitcoin captures the store-of-value space and flips Gold (which on its current trajectory seems inevitable) that would put Bitcoin’s market cap at $10 Trillion.
Ethereum has to conquer a lot of ‘IFs’ to get to $5 Trillion, and bitcoin only has to conquer one IF, that is store-of-value, and it will beat Ethereum without breaking a sweat.
To put some numbers and assumptions to take this a step further, let’s consider that Bitcoin succeeds to flip Gold, that one event itself will put Bitcoin’s value at over $475,000 per coin and its market cap over $10 Trillion.
|EVENT||Market Cap||Price Per Coin||Comments|
|Bitcoin Flips Gold||$10 Trillion||$476,190|
|Adds: Bitcoin Captures 10% of world's retirement funds||$15 Trillion||$714,286||Global Pension Fund value $50 Trillion as of 2020|
|Adds: Bitcoin becomes global reserve currency||$25 Trillion||$1,190,476||Global USD reserve is around $10 Trillion as of 2011|
For Ethereum to capture $10 Trillion market cap, it has to add an entire app space equal to current mobile app space of $365 Billion, and in addition has to add 10% of global derivatives market and 10% of global stock market.
|Event||Market Cap||Price Per Coin*||Comments|
|Ethereum creates a parallel App space [Current value of $365 Billion]||$1 Trillion||$8,622||We expect a parallel app space will add to existing market cap|
|Adds: 10% of global derivatives market [Current value of $15 trillion]||$2.5 Trillion||$21,556||For Ethereum to onboard 10% of global derivatives space will take a lot of time.|
|Adds: 10% of global stock market [Current value of $70 trillion]||$10 Trillion||$86,223||Global USD reserve is around $10 Trillion as 2011|
|*assuming maximum supply equal to current count of 115,978,555|
*assuming maximum supply equal to current count of 115,978,555
Those tasks are not small feats for Ethereum. However, if Bitcoin can continue its inflection and capture a small percentage on the global corporate balance sheets and a very small portion of global pension funds – it can easily break the $10 Trillion market cap threshold.
In addition, if Bitcoin positively takes over the store-of-value space along with 10% of global retirement funds, it will push Bitcoin’s value to $1 Million each.
Regulatory forces might favor Ethereum over Bitcoin
Governments hate Bitcoin. This is no secret.
Just to show their spite, governments around the globe could take concerted actions to discourage institutions and the general public from touching Bitcoin.
What if governments say individuals cannot hold more than $5000 worth of bitcoin? Or that you have to pay taxes on the ‘appreciation’ of Bitcoin’s value?
On the other hand, as more and more wall streeters get on Ethereum, we might see a different stance on Ethereum (for one, it is created in the US and is easily traceable/programmable).
This negative narrative could impact bitcoin negatively.
Tough challenge for Ethereum to flip Bitcoin
As you can see, Bitcoin has a blue ocean scenario to break the $10 Trillion market cap and still have room to penetrate into pension funds and take on the global reserve currency needs as well.
On the other hand, Ethereum will have to do a lot more heavy lifting even to break the $1 Trillion market cap.
Markets are irrational
Markets are not logical, they are irrational and emotional.
If the markets notice that big brand names are getting on the Ethereum bandwagon, they may abandon Bitcoin and bring unimaginable (and irresponsible) exuberance to the Ethereum.
That could bring Bitcoin down while lifting Ethereum’s market share.
In this scenario, Ethereum might flip Bitcoin, although we think temporarily (similar to what Bitcoin Cash did in 2017).
In our opinion, chances of Ethereum flipping Bitcoin’s market cap are slim to none, however, if there is any vulnerability found in Bitcoin or governments impose restrictions on Bitcoin, those events could bring Bitcoin down and transfer the wealth from Bitcoin into Ethereum.
Other than the exceptions, we think Bitcoin will retain its number 1 position for foreseeable future.
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