Ethereum Continues to Pressure Bitcoin Out of Top Crypto Spot

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In just months, Bitcoin’s status as the dominant cryptocurrency in an ever-growing field has changed considerably. Ethereum, the network which has been in existence for just over two years and which has fueled a recent spate of initial coin offerings, or ICOs, in the launching of new crypto-related startups, has been making strides toward taking over the top position when it comes to market share. According to a report by Business Insider, Ethereum’s percentage of the total market for cryptocurrencies has dramatically increased since the beginning of 2017.

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From 5% to 30% to ???

At the beginning of the new year, Ethereum’s share of the crypto market stood at just 5% or so. By the last week of June, its percentage of market capitalization had grown to roughly 30%. Along with the major gains in market share have also been numerous record high price levels for Ether, Ethereum’s virtual token. Bitcoin has also risen considerably in price since the start of 2017, reaching new price peaks and topping $3,000 per coin for the first time earlier this year.

However, while both of the leading digital currencies have made major gains in price, Ethereum’s rise in market share has necessitated Bitcoin’s simultaneous drop. According to Business Insider’s report, Bitcoin’s market cap as a percentage of the total market has declined from roughly 85% at the start of the year to below 40% by the midway point of 2017.

The Flippening?

Some analysts and cryptocurrency investors have foreseen a process like this one. Bitcoin has been the dominant cryptocurrency by the market cap metric since its inception, but skeptics have predicted a phenomenon known as the “Flippening,” through which another cryptocurrency like Ethereum would take over, permanently displacing Bitcoin. While the previous shifts in market share percentage would indicate something like this developing, in recent weeks Ethereum’s share of the market has actually pulled back slightly.

Why would Bitcoin be toppled from its position atop the cryptocurrency field? According to Paul McNeal, a Bitcoin expert, Ethereum’s advantage is that it can be used both as a currency and as a means to “represent virtual shares, assets, proof of membership, and more.” It is this multifaceted nature of Ethereum that has made it even more influential than Bitcoin. Mike McGovern, head of Investor Services Fintech Offerings for Brown Brothers Harriman Co., indicated that “Ethereum is not only cheaper than Bitcoin, it is also more robust and has more applications outside of simply financial transactions.” This seems to be a feeling that is shared more broadly among financial institutions. According to a recent survey cited by Nathaniel Popper in the New York Times, roughly 94% of surveyed financial firms indicated a positive feeling about the state of Ether. At the same time, only 49% of those surveyed had a positive feeling about Bitcoin.