• Bitcoin fixed supply makes it more scarced than Ethereum, but with the Ethereum 2.0 upgrade this can change and level the playing field.
• Can Ethereum’s market cap surpass Bitcoin’s and put Ethereum as number 1 cryptocurrency in the world is the key question here, and if/when this occurs we would/will witness flipping.
• Bitcoin is the main financial tool in crypto space, while Ethereum dominates development of crypto infrastructure through DeFi (Decentralized finance), NFT’s (Non fungible tokens) and most recently Metaverse projects.

Bitcoin vs Ethereum Debate

This can be considered as one of the biggest debates in the crypto space ever since Ethereum (ETH) gained momentum in 2017/2018 and firmly position itself as a number two cryptocurrency, right behind the pioneer of the whole industry Bitcoin (BTC). We will look at this debate from an analytical point of view and try to present both cases in their own right so you can conclude for yourself how this may play out.

Bitcoin vs Ethereum Supply

It is clear that Bitcoin wins this race for now because it has a circulating supply of 18,977,175 million compared to Ethereum’s current circulation supply of 119,868,379 million at the time of writing. This makes it more scarce and as you know, when something is scarce and in demand, only one thing can happen and that is value increase. Another significant difference in the supply of Bitcoin is that it is fixed to 21 million, unlike Ethereum’s which is, in theory, uncapped and can be mined (creation of new coins that are introduced into circulation supply) forever. This is another big fact that puts Bitcoin scarcity ahead of Ethereum’s and gives Bitcoin fans a strong argument that Bitcoin will always be the number 1 cryptocurrency and will never be overtaken by Ethereum or any other altcoin.

This debate would not exist if Ethereum was not going through upgrade popularity called Ethereum 2.0, which will among many other things contribute to making Ethereum a deflator token. I will talk more about Ethereum 2.0 in debt in another post but for now, just know that this update should make the supply of Ethereum decrease by burning a portion of ETH with every transaction that occurs within the network. This is an important fact that can help Ethereum become less available and therefore increase its price dramatically in the years to come, with some other benefits that will be part of this upgrade to Ethereum 2.0.

Ethereum vs Bitcoin Market Cap

When we talk about Ethereum flipping (passing) Bitcoin in the value we are not talking about value per ETH compared to BTC because that will never happen given the supply of each coin that we discussed earlier. In this case, we are talking about the market cap of Ethereum surpassing the market cap of Bitcoin. If this scenario happens we will have popular flipping come to life and we will see ETH as a number 1 cryptocurrency ahead of BTC. At the time of writing market cap of BTC is 728 billion compared to 303 billion of ETH, or roughly 2.4 times more. This may seem like a big difference but if we look at historical numbers of both assets we can see that only 2 years ago on March 20th of 2020, the Bitcoin market cap was just over 113 billion, while during the same time Ethereum’s market cap was slightly above 14 billion according to data from CoinGeco. This data tells us that during that time Bitcoin’s market cap was 8 times higher than Ethereum’s, which means that in 2 years that gap was narrowed significantly by 3.3 times. Can this be a clear sign that Ethereum is coming closer and closer to surpassing Bitcoin in the next few years, and becoming the more valuable crypto asset on the market?

Bitcoin vs Ethereum Holders

The number of holders usually represents the successfulness of the project, more holders there are usually means more legit the project is. It is important to note that this only applies to already established projects since this number can be manipulated with airdrops and bots that will count as holders on blockchain but in reality do not add value to the project. We do not have to worry about that in this case since both of these assets have been around for some time, are used by many institutions, and are as legit as it gets.

In reality, we cannot really know the number of people that hold Bitcoin since one person can own multiple wallets with a Bitcoin balance. Data from Glassnode shows us however that there are around 40 million Bitcoin addresses with balance.

Ethereum same as bitcoin can have the same owner of multiple wallets so it is impossible to tell how many people are actually holding the asset. According to the Glassnode data, the number of Ethereum addresses with a balance reached over 71 million.

We can see that Ethereum has around a 31million or 77% more active addresses than Bitcoin. This is not surprising, since ETH is used to pay for gas fees on the Ethereum network, which processes over 70% of Defi transactions and 80% of NFT’s traffic in the whole crypto industry. This shows however that Ethereum has gained serious momentum and is a serious threat to Bitcoin’s dominance in the crypto space.

Market Dominance

The best example of this can be seen through the market dominance of each asset, a number that was heavily dominated by Bitcoin that was taking up to 60% of the crypto market up until late 2020. By the end of 2020 Ethereum started to take the portion of the market from Bitcoin as slowly decrease the gap between the two. At the time of writing BTC’s market dominance is 41%, while ETH’s market dominance is at 17%. This number fluctuates and we have seen ETH market dominance go above 20%.

Are we slowly entering the crypto market dominated by ETH time will tell, but at this point, it sure looks like BTC has a serious contender in ETH for that number 1 spot, which was only a few years back unthinkable.