© Reuters In this illustration taken May 17, 2022, note tokens representing the cryptocurrencies Bitcoin and Ethereum networks have been plunged into water.
By Meda Singh and Lisa Pauline Matakkal
(Reuters) – For years, Ether never dreamed of challenging its big brother, Bitcoin. Now, that wish may become more of a reality.
The second-biggest cryptocurrency is taking market share from bitcoin ahead of a major “merger” software update that could drastically reduce the blockchain’s power usage if developers roll it out in the coming days.
According to data platform CoinMarketCap, its dominance, or share of the market value of the crypto market, fell to 39.1% in mid-June from a peak of 47.5% this year. On the other hand, Ether increased from 16% to 20.5%.
The startup is a long way from overtaking bitcoin as the No.1 cryptocurrency, a reversal known to enthusiasts as “rolling.” It’s done, though; In the year In January 2021, Bitcoin dominated by 72 percent, while Ether held a slim 10 percent.
In terms of price, one Ether is currently worth 0.082 Bitcoin, a December 2021 high and a June 2022 low of 0.049.
“People now see Ethereum as a safe asset, because they’ve seen the success of the network, they don’t think it’s going anywhere,” said Joseph Edwards, head of financial strategy at fund management firm Sorice Finance.
“There is sustainability in how Ethereum is perceived in the crypto ecosystem.”
Graphic: Bitcoin’s Dominance Declining: https://graphics.reuters.com/FINTECH-CRYPTO/WEEKLY/zdvxomazgpx/chart.png
CAPRICIOUS CRYPTO
The merger, which is expected to take place on Thursday after several delays, could lead to widespread use of the blockchain and boost the price of Ether – although nothing is certain in the volatile crypto market.
Ethereum will form the backbone of much of the “Web3” vision of the Internet, where Ethereum will be the main crypto platform, powering applications that include crypto offshoots such as decentralized finance and fiat tokens – although this much-touted dream is still far from reality.
Bitcoin and Ether have both halved this year in response to interest rate hikes by central banks. Still, investors seem to like the look of the merger, with Ether up more than 65% since late June. Bitcoin has not declined much over the same period.
Doug Schwenk, CEO of Digital Asset Research, said, “We see[Ether’s]appeal to some investors who are concerned about energy consumption,” although he cautioned that Ether is still a long way behind Bitcoin.
The king is strong.
Bitcoin’s waning dominance in crypto’s current bear market stems from previous market cycles, when investors sold smaller tokens — “altcoins” — in favor of the more liquid and secure bitcoin.
Deposing a king is not an easy task.
Bitcoin is by far the most popular cryptocurrency. Major investors who have dipped their toes into the crypto market since 2020 tend to turn first to Bitcoin, the most liquid and widely traded token.
Its market value of $427 billion is still more than double that of Ether’s $210 billion, and market participants strongly believe that the main digital coin will remain the gold standard in crypto due to limited supply.
Some market players say that Bitcoin’s hold on the crypto crown is still strong, even if it has to accept other competitors. For example, Hugo Xavier, CEO of K2 Trading Partners, said that if the crypto market turns bullish, its dominance may improve to 50%-60%, but it is unlikely to touch 70% again.