Crypto is a digital asset that serves as a medium for exchange. With Cryptos, a ledger is used to record each coin’s unique ownership. There are various Cryptos on the market, and the most popular ones are Bitcoin and Ethereum. Generally speaking, Bitcoin has a higher rate in the market than Ethereum. However, the hypothetical situation in which the overall market capitalization of Ethereum exceeds the total market capitalization of Bitcoin is known as “Flippening.”

In this article, we’ll learn more about this concept in detail. Let’s get started!

What is the Flippening?

Fans of Ethereum wish for an event called “Flippening,” in which Ether’s market capitalization surpasses that of Bitcoin.

The term was created during the 2017 bull run when Ethereum surpassed Bitcoin to reach its all-time high.

The market made a bet on Ethereum’s increased adaptability throughout the 2017 bull run due to its capacity to create apps using smart contracts. Ethereum’s price experienced a significant increase due to an influx of liquidity; however, its market capitalization later fell again in comparison to Bitcoin. Bitcoin is still the most valued Crypto by market capitalization, followed by Ethereum.

More details on Flippening

Market capitalization in the Crypto world is determined by multiplying the total number of coins that are in circulation by the price per coin, similar to how market capitalization is calculated for companies. In the case of Crypto, the price per coin is often pegged to fiat currencies, such as U.S. Dollars or Euros.

The Flippening, which refers to the hypothetical scenario where Ethereum surpasses Bitcoin in market capitalization, could occur through a combination of factors. One factor is the price performance of Ethereum relative to Bitcoin. If the price of Ethereum grows faster compared to Bitcoin, it could contribute to a Flippening. Even if both Cryptos experience price declines, Ethereum may still outperform Bitcoin over time, leading to a potential Flippening.

The total coins in circulation also play a role in the Flippening. If the supply of Ethereum increases at a faster rate compared to Bitcoin, it could impact their respective market capitalizations. Ethereum currently has no cap on the total supply of Ether, as it is generated through rewards to miners and staking. However, the planned transition to Ethereum 2.0, which involves a switch to a Proof-of-Stake (PoS) system, is expected to reduce the total supply of Ether over time, potentially boosting its value.

In comparison, Bitcoin has a hard cap of 21 million coins, with almost 19 million Bitcoins already mined as of March 2023. A gradual increase in the supply of Bitcoin in the coming decades could contribute to its market capitalization continuing to rise and potentially prevent a Flippening scenario.

It’s crucial to note that the Crypto market is highly volatile and unpredictable, and the factors influencing the Flippening are complex and can change over time. The future market dynamics of Bitcoin and Ethereum, including their prices and supply, will continue to evolve, and the occurrence of a Flippening cannot be guaranteed.

Key metrics to measure the Flippening

• Active Addresses

The total number of unique addresses that send or receive a transaction in a particular week is known as active addresses.

• Transaction Count

The transaction count displays the relationship between all on-chain transactions that take place on the network.

• Transactions Volume

The transaction volume is the whole sum of USD transferred through the network.

• Trading Volume

The adjusted exchange trading volume for BTC and ETH.

• Total Transaction Fees

The total transaction fee is the total USD cost of transaction fees for using the network.

• Node Count

Node count refers to how many nodes are accessible to the public.

• Google Search Interest

How frequently are people looking up to “Bitcoin” vs. “Ethereum” on Google?

• Tweets

How frequently do people tweet about “#Ethereum / #ETH” compared to “#Bitcoin / #BTC”?

To get a detailed overview of these metrics, click here.

Possibilities that Flippening will happen

• Technological Superiority: Many experts believe Ethereum has several technological advantages over Bitcoin, such as smart contract functionality, which allows developers to create Decentralized Applications (DApps) and programmable transactions. Additionally, Ethereum has faster transaction times and lower fees compared to Bitcoin, making it more efficient for certain use cases.

• Strong Community Support: Ethereum has a large and growing community of developers, businesses, and investors who are committed to the platform’s success. This community has contributed to the progress of fresh features and improvements, as well as increased adoption of the platform.

• Growing Use Cases: Ethereum is increasingly being used for various purposes beyond just a currency, such as Decentralized Finance (DeFi) applications, Non-Fungible Tokens (NFTs), and more. As more use cases are developed, it could drive demand for Ethereum and increase its value.

• Bitcoin’s Limitations: Some argue that Bitcoin’s limitations, such as its lack of smart contract functionality, scalability issues, and high transaction fees, could hinder its growth in the long run. This could lead to investors shifting their focus to other Cryptos like Ethereum, which offer more advanced features.

Bottom line

In summary, the probability of a Flippening between Ethereum and Bitcoin appears to increase with each successful Ethereum network update. Even though the post-Merge Ethereum has already surpassed over a third of Bitcoin’s market capitalization, further updates in the Ethereum roadmap could propel its market dominance. As the Crypto market experiences volatility and the bull market returns, it’s possible that Ethereum will make another push toward the top spot in terms of market capitalization, potentially leading to a Flippening event.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.