Bitcoin’s got a longer history and double the market size. But Jon’s found three reasons why Ethereum could dethrone it.
Bitcoin has about twice the market share of Ethereum and is still the No. 1 blockchain.
But Ethereum has more use cases than Bitcoin, and ether has proved to be a better investment in recent years.
Ethereum’s switch from miners to validators also has its perks, but it could bring unwanted complications on the regulatory front.
With the crypto market rallying, you might be wondering whether bitcoin is still the best long-term investment – or whether ether will give you more bang for your buck. And, look, bitcoin’s great: its market dominance to this point cannot be disputed. But I’ve got three reasons why ether could be poised not only to deliver better growth, but to even someday overtake the OG crypto in market share…
In the constantly evolving world of cryptocurrencies, one question keeps popping up among investors and tech enthusiasts alike: can Ethereum actually overtake Bitcoin? This debate, often referred to as “the flippening,” has gained renewed attention after BitMEX chairman Tom Lee made some interesting comparisons between Ethereum’s potential trajectory and historical financial shifts. As someone who’s been following this space closely, I wanted to dive deep into this fascinating possibility.
The Current State of the Crypto Giants
Before we jump into predictions, let’s look at where these two crypto behemoths currently stand:
- Bitcoin (BTC): Approximately $2.17 trillion market cap
- Ethereum (ETH): Around $476.33 billion market cap
- The Gap: Bitcoin is roughly 4.6 times larger than Ethereum
This means Ethereum would need to grow substantially to challenge Bitcoin’s dominance. But is such growth actually feasible? Many experts including BitMEX’s Tom Lee, believe it could happen.
The Wall Street-Gold Standard Parallel
Tom Lee has drawn an interesting historical parallel that frames this potential shift in a compelling way During his interview with ARK Invest CEO Cathie Wood, Lee compared Ethereum’s possible rise to how US. equities surpassed gold after 1971 when the United States abandoned the gold standard.
Here’s what happened after 1971:
- Gold initially surged in value
- Over time, U.S. equities exploded in growth
- The stock market eventually dwarfed gold’s market capitalization
- Today, equities’ market cap is around $40 trillion compared to gold’s $2 trillion
Lee argues that we might see a similar pattern with Bitcoin and Ethereum. In this analogy:
- Bitcoin functions like gold – scarce, reliable, but fundamentally inert
- Ethereum resembles the dollar/equities system – productive, adaptable, and powering innovation
“Ethereum could flip Bitcoin similar to how Wall Street and equities flipped gold post-’71,” Lee explained in his interview.
Why Ethereum Might Eventually Overtake Bitcoin
1. The Utility Factor
While Bitcoin excels as digital gold and a store of value, Ethereum serves as an entire ecosystem supporting:
- Smart contracts
- Decentralized applications (dApps)
- Decentralized finance (DeFi)
- NFTs and digital collectibles
- Tokenization of real-world assets
Joseph Lubin, Ethereum co-founder and ConsenSys CEO, recently predicted that Ethereum could surge “by 100 times” and eventually overtake Bitcoin as the dominant monetary base. He believes Wall Street’s growing integration with decentralized technology could be a major catalyst.
2. Transaction Volume & Network Activity
Ethereum consistently processes more transactions than Bitcoin and powers the majority of DeFi and NFT activity. This higher utilization could eventually translate to greater market value.
3. Institutional Adoption for Practical Uses
Financial institutions are increasingly adopting Ethereum for:
- Staking
- Validator nodes
- Layer-2 solutions
- Tokenized bonds and funds
- Corporate asset management
Lee described Ethereum’s smart contracts as “the next layer of the internet” during a CNBC appearance, highlighting its fundamental role in the evolving digital economy.
The Math Behind a Potential Flippening
For Ethereum to reach Bitcoin’s current market cap, it would need to increase its price significantly. With 120.7 million ETH in circulation versus 19.9 million BTC, Ethereum would need to reach approximately $17,379 per ETH to match Bitcoin’s current market capitalization.
This might sound like an impossible leap, but historical data shows that across certain five-year periods, Ethereum has actually outperformed Bitcoin. ETH has achieved an average annualized return of 60.4% during some stretches, slightly ahead of Bitcoin’s 59.1%.
Timeframes for a Potential Flippening
Based on mathematical projections:
| Annual Growth Rate | Years Until Potential Flippening |
|---|---|
| 20% | ~8.4 years |
| 30% | ~6 years |
| 50% | <4 years |
These projections assume Bitcoin’s market value stays constant, which is an unlikely scenario since Bitcoin will probably continue growing as well.
Expert Opinions Beyond Tom Lee
It’s not just Tom Lee who sees Ethereum’s potential. Robert Kiyosaki, author of “Rich Dad, Poor Dad,” has also weighed in, describing Ethereum as both a store of value and an industrial asset.
“Today, I believe silver and Ethereum are the best because they are stores of value, but more importantly, they are used in industry,” Kiyosaki stated, calling both assets “hot, hot, hot” for the next cycle of wealth preservation.
The Tokenization Revolution
One of the most compelling arguments for Ethereum’s long-term dominance is its role in the coming tokenization revolution. As Lee put it, “As everything becomes tokenized, Ethereum could be the financial substrate of the digital economy.”
What does this mean practically? We’re already seeing:
- Real estate being tokenized on Ethereum
- Securities and financial instruments moving on-chain
- Supply chains being tracked via Ethereum-based solutions
- Digital identity infrastructure being built on Ethereum
This transformation mirrors what happened when financial markets exploded in complexity and value after the gold standard ended. The financial system became more dynamic, innovative, and ultimately much larger than gold itself.
Challenges That Could Prevent the Flippening
Despite the optimistic outlook, several factors could prevent Ethereum from overtaking Bitcoin:
1. Bitcoin’s First-Mover Advantage
Bitcoin has unparalleled brand recognition and has established itself as digital gold in mainstream consciousness. This psychological advantage cannot be underestimated.
2. Scaling Challenges
While Ethereum is making progress with its shift to proof-of-stake and layer 2 scaling solutions, it still faces challenges in handling massive global adoption without congestion issues.
3. Regulatory Uncertainty
Regulatory decisions could impact either cryptocurrency differently. Some jurisdictions might favor Bitcoin’s simpler structure over Ethereum’s more complex ecosystem.
4. Competition from Other Smart Contract Platforms
Ethereum isn’t just competing with Bitcoin. Other smart contract platforms like Solana, Cardano, and Avalanche are vying for market share in the programmable blockchain space.
My Perspective on the Flippening Debate
Honestly, I think both Bitcoin and Ethereum will continue to grow and thrive in their respective niches. Bitcoin has cemented its position as digital gold and a store of value, while Ethereum is evolving into the foundation of our digital financial future.
Could the flippening happen? Yes, I believe it’s possible within the next decade if Ethereum continues to be the backbone of blockchain innovation and adoption. However, I don’t view this as a zero-sum game where one must fail for the other to succeed.
Currently, Ethereum commands about 21% of Bitcoin’s market size nearly a decade after its launch. The gap is substantial, but not insurmountable given the exponential growth patterns we sometimes see in technology adoption.
What This Means for Investors
If you’re considering investing in either cryptocurrency, here are some thoughts:
- Bitcoin remains the safer, more established choice for those seeking a digital store of value
- Ethereum offers potentially higher growth but comes with additional complexity and risks
- Diversification across both assets might be the wisest approach for many investors
Lee recently predicted that Ethereum could rally to $5,500 in the near term, with a year-end target of $12,000. While these predictions should be taken with a grain of salt, they do reflect growing institutional confidence in Ethereum’s fundamental value proposition.
The Bigger Picture: Beyond the Flippening
Rather than focusing solely on which cryptocurrency will have the larger market cap, I think it’s more productive to consider how these technologies complement each other in building our digital future.
As one analyst quoted in the article noted: “Gold will always have value, but the future of finance was built on equities, and the future of blockchain may be built on Ethereum.”
This reframes the rivalry not as a contest of ideology but of function. Bitcoin excels as a store of value, while Ethereum excels as a platform for innovation and development.
Based on current trajectories and expert analysis, I believe Ethereum has a legitimate chance of eventually surpassing Bitcoin in market capitalization, though it would likely take at least 6-8 years of sustained outperformance.
The comparison to post-gold standard financial markets provides a compelling framework for understanding how this shift might occur. Just as equities eventually dwarfed gold through innovation and utility, Ethereum could potentially surpass Bitcoin by becoming the foundation of our tokenized future.
However, the path isn’t guaranteed, and both cryptocurrencies will likely continue to grow in parallel, serving different but equally important functions in the emerging digital economy.
What do you think? Could Ethereum eventually flip Bitcoin, or will Bitcoin maintain its dominance indefinitely? I’d love to hear your thoughts in the comments!
Ethereum’s switch to proof-of-stake gives ether an edge.
In September, Ethereum transitioned from a proof-of-work (PoW) blockchain to a proof-of-stake (PoS) one, in an event called the “merge”. So now, unlike Bitcoin, Ethereum no longer depends on miners to secure its network, but uses validators instead. And that could be good for the price of ether for two reasons.
First, validators don’t have to cough up for expensive mining equipment and electricity to run their business – so they don’t need to churn out as many new coins to turn a profit. And that’s turning ether into a scarcer commodity: since the merge, new ether issuance has dropped from a pace of over 3% a year to practically zero %, compared to bitcoin issuance at around 1.7%. What’s more, miners are notorious for selling their coins when they need the money to pay their hefty bills. But validators don’t have that problem: instead, they lock up their ether to earn rewards, which means they can’t sell it. So overall, there’s likely to be fewer new ethers minted and less downward pressure on the price.
Second, the switch to PoS could make ether more appealing to big institutional investors. If there are two things that excite the big money, it’s ESG (environmental, social, and governance) and yield. And Ethereum’s recent upgrade boosts its score on both counts. Validators use a tiny fraction of the electricity that miners do, and Coinbase is now allowing US-based asset managers to stake ether to earn passive income. Again, when you’re staking ether, you aint selling it.
Ethereum has more uses than Bitcoin.
Bitcoin (the blockchain, with a capital “B”) is a payments network that allows you to ping bitcoin (the digital currency, with a small “b”) to anyone in the world. You can read more about how Bitcoin works over here.
Ethereum is a payments network too, and it’s the No. 1 smart contract blockchain. I wrote about how Ethereum smart contracts work over here, but the TL;DR is that they allow developers to build all kinds of decentralized applications (dapps) on Ethereum. That makes it ideal for lots of use cases, including: DeFi, NFTs, blockchain gaming, decentralized data storage, and decentralized autonomous organizations (DAOs).
Technically, it is possible to build dapps on Bitcoin using other blockchains that plug into it, but it’s a complicated process. Unlike Ethereum, Bitcoin wasn’t built for running dapps from the get-go.
So, it’s not surprising that the number of Ethereum wallets sending or receiving crypto each week (blue line) has been catching up with Bitcoin wallets (gray line):
Billionaire Michael Saylor Explains The Difference Between Bitcoin And Ethereum
FAQ
Which crypto will surpass Bitcoin?
Ethereum: The Smart Contract Pioneer
With the SEC expected to offer new guidance on staking, ethereum could see even more institutional adoption and regulatory clarity this year. As more developers and investors flock to ethereum, its potential to surpass bitcoin in utility and value becomes increasingly likely.
How high can Ethereum realistically go?
Will Ethereum reach $10,000?
What if you bought $1000 of Ethereum 5 years ago?
Historical price data are from CoinMarketCap. 1 year ago: If you invested $1,000 in Ethereum in 2024, your investment would be worth $1,767. 5 years ago: If you invested $1,000 in Ethereum in 2020, your investment would be worth $11,145.