Ethereum, Bitcoin Flippening: What Gives?

There is nothing like a new word to get people’s juices flowing. “Flippening” is the idea of an underdog overtaking a winner. In this case the idea is that Ethereum will overtake bitcoin in market cap.

Here is a chart of Ethereum versus bitcoin:

The blue line is Ethereum and as you can see Ethereum has the bounce but does it have “the win.”

Here is another chart:

What you are seeing is that Ethereum has had the beta; it can go up more and drop more, too. It is the spring chicken compared to bitcoin’s old steady hen.

You can also see Ethereum follows bitcoin but doesn’t lead it.

So the idea that Ethereum will overtake bitcoin is down to the shift from proof-of-work to proof-of-stake. To me this is a political judgement. Is centralization via “stakers” versus decentralization via miners the winning formula? Whether mining with big pools versus stakers with static nodes is more or less centralized is a discussion, but I’m on the side that stake is centralized versus mining. Centralization may be the winning method after all and decentralization a loser versus government. It’s simply an opinion right now.

However, bitcoin is still the brand and remains the stable platform. It will lead Ethereum. Until this leadership position changes there won’t be a flippening.

Ethereum will continue to be the token with the beta (volatility) and if there is another leg down to the bottom of the crypto-winter it will lose more than bitcoin. When the bounce comes it will outperform bitcoin but it will follow and still likely lag the market cap of bitcoin.

Meanwhile the “Merge” did not solve the overly expensive transaction problem of Ethereum and at some point in the near future the pretenders like Polygon and Avalanche will start eating Ethereum’s lunch. That’s not a good basis for crypto dominance.

You can love Ethereum, but it doesn’t mean it will be number one. I will be trying to buy it at the bottom like I have in the past, but I won’t be caring which crypto is number one because it has no impact on returns.