Crypto enthusiasts are waiting for “volatility,” when the price of Ether over Bitcoin

Bitcoin, the world’s largest cryptocurrency, has long reigned supreme in the world of digital assets. But now, thanks to Ether’s astonishing rise, fans of the #2 coin by market capitalization are rekindling expectations that it is set to take the throne one day.

In coding parlance, it’s known as “flipping” – and it’s still likely a long way off, if it ever does. The market capitalization of Ether is around $210 billion, less than half the size of Bitcoin even after Ether has surged 50% over the past month. However, believers are energized with new optimism as a milestone approaches they say will increase the chances of it happening – perhaps sooner rather than later.

“I keep hearing people repeating the question, ‘Where do you flip? “Although there is no guarantee that this will ever happen, just by looking at the numbers it seems like this event is getting closer every day.”

The Ethereum blockchain booster has been touted as an almost better version of Bitcoin since it was designed by programmer Vitalik Buterin in 2014 and launched a year later. The Bitcoin white paper was revealed in 2008 and attributed to Satoshi Nakamoto, the name used by the person or group supposedly bearing the pseudonym.

Ether has skyrocketed in recent weeks with growing optimism about a long-awaited software upgrade, which will facilitate the transition from the current system of using miners to a more energy-efficient system using stacked coins. The switch to this so-called proof of stake system is expected in September after it has been in operation for several years. Ethereum developers recently indicated that progress in testing the new system continues, and they are holding a series of events for potential applicants and other community members in the coming weeks.

QCP, a cryptocurrency exchange, said its desk has traded an “incredible amount” of Ether call options over the past days, adding that hedge funds have been big buyers. “We expect this demand to continue as we approach the merger in September,” they wrote in an update to Markets on Telegram.

Ether has gained nearly 50% since mid-June, and Ethereum-related assets have also advanced. Uniswap, the most popular decentralized cryptocurrency exchange on Ethereum, has jumped nearly 70% over the past month, according to data compiled by Bloomberg. Meanwhile, Bitcoin’s dominance has waned to around 40% of the market, down from 70% in January last year, according to CoinMarketCap.

“We love Ether, and we think it’s a key differentiator,” said Joe DiPasquale, CEO of BitBull Capital, which operates private crypto hedge funds. “Bitcoin was the hundred-pound gorilla, but ether is really another hundred-pound gorilla. Everything else lags behind.” His company owns Ether and was buying while the coin was rising from $1,000 to $1,500. He added Dipascual to his position last week.

Flipping is “absolutely possible,” said Bodhi Pinkner, an analyst at crypto asset management firm Arca. “We have a positive view of Ethereum,” he said, adding that, after the merger, it will become a deflationary asset. “So the change of dynamic theoretically bodes well for the price of Ethereum relative to Bitcoin, especially in a tightening environment.”

This is certainly not a new development. Cryptocurrency crowds have been searching for signs that Bitcoin’s dominance could wane as other projects and tokens emerge. And while work on the merger has been going on for years, it has been delayed several times. It was recently expected to take place in June, but has been postponed again.

“The merger itself is a very risky event and any number of things can go wrong,” said Quantum’s Greenspan. “As always in the markets, higher risks can equate to higher returns. They don’t call it risk because it is thin and safe.”

Henry Elder, Head of Decentralized Finance at Wave Financial, agrees.

“The merger is overrated from an Ethereum price perspective,” he said. “It is a very important technical change for Ethereum, but 99.99% of users will not experience any difference at all until months or years later. Meanwhile, the effects of downsizing and reallocating it will take some time to filter back to the Ethereum price.”

He points to the Bitcoin halving, a pre-programmed update that halves Bitcoin rewards for miners every four years or so. He said the impact of such an event could also take months to appear in the market.

“I wouldn’t be surprised to see prices pumping into the consolidation, but I don’t think it’s a sustainable stimulus until the second half of 2023,” Elder said.

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