Ethereum Is Rising Faster Than Bitcoin: Has the Flippening Begun?

Of course, a faster price rise over an arbitrarily chosen period doesn’t necessarily mean anything on its own, yet other indicators suggest that ethereum may continue rising faster than bitcoin in the short and longer term. Because not only has its rate of inflation slowed down below that of bitcoin’s, but Ethereum itself continues to benefit from the expansion of the decentralized finance (DeFi) and non-fungible token (NFT) sectors, which are pushing gas prices through the roof once again.

At the same time, the increasingly imminent arrival of Ethereum 2.0 and proof-of-stake also gives Ethereum — and the ETH price — plenty to get excited about. However, with cardano and solana (among others) rising faster than ETH, other communities could almost as easily argue that it’s the flippening of Ethereum that has just begun.

Why Ethereum is Outperforming Bitcoin Right Now

It’s not only on proportional price rises that Ethereum is beating Bitcoin right now. Most notably, it appears to be becoming more deflationary than BTC. Yes, that’s right, the cryptocurrency — Bitcoin — billed as being the digital equivalent of gold (in fact, billed as being scarcer and sounder than gold), is currently being out-deflated by what is ostensibly a utility token.

This particular flippening has been helpfully highlighted by Lucas Outumuro, the Head of Research at Into the Block. In a series of tweets dating from August 27 to September 4 (the latest, as of writing), he has noted how the rate of daily issuance of new ethereum — as a proportion of its overall supply — has fallen below the daily issuance rate of new bitcoin. This was because of the London hard fork, which was completed on August 5 and which introduced an upgrade (EIP-1559) that has resulted in a portion of Ethereum transactions being burned.

Source: Twitter

Interestingly, it was around August 27 that ethereum began its parabolic rise to just below $4,000 (and counting). Indeed, on August 27 ETH stood at around $3,100, having fallen a little compared to the previous week.

Source: CoinGecko

Yet the fun doesn’t stop there, because other data indicates that ethereum’s conversion into a deflationary currency was only just getting started. For example, Outumuro also observed that the growing surge in NFT activity is resulting in more transactions on the Ethereum blockchain, which in turn results in more transaction fees (in ethereum) being burned.

The downward spikes in this chart indicate ETH being burned. Source: Twitter

It’s worth pointing out that NTF marketplaces are indeed ballooning in terms of volumes and transactions, and had a particularly strong August. For example, OpenSea recorded a whopping $3.4 billion in transaction volumes in August alone, according to Dune Analytics, representing a tenfold increase over July (and September is already up to $866 million after only seven days).

Likewise, NonFungible.com records the seven-day sales volume on all primary NFT markets reaching $115.4 million on August 29, compared to only $9 million on July 29 (note: NonFungible’s data doesn’t include OpenSea, so the actual total is likely to be higher). This activity is in addition to the DeFi sector, which now accounts for $100 billion in total value locked in, compared to $64.4 billion on July 21, indicating a 55% jump in just under a month and a half.

Needless to say, this explosive growth in activity is only going to benefit Ethereum, which hosts the vast majority of the cryptocurrency sector’s DeFi and NFT platforms (around 73% according to DeBank). As the NFT and DeFi sub-sectors continue to grow, Ethereum is going to continue to become more deflationary, with a rising proportion of ethereum being burned each day.

Ethereum Flippening Bitcoin: Will It Continue?

Indeed, as DeFi and NFT activity continued to surge towards the end of August and beginning of September, Ethereum became more deflationary. In fact, September 4 was its first full day of being deflationary, in the sense that more ETH was burned than issued.

Source: Twitter

This is a momentous achievement, particularly when you consider that Ethereum was not originally meant to be a deflationary cryptocurrency like Bitcoin, but rather a utility blockchain, a ‘universal computer.’

For the Ethereum community, this emerging trend of ETH becoming more deflationary has got them excited, with some indeed concluding that Ethereum is flippenning Bitcoin.

Source: Twitter

Even a growing number of analysts are now suggesting that Ethereum has begun flippening Bitcoin. Bloomberg analyst Mike McGlone predicted this on August 9, noting that ETH is growing much faster than BTC right now.

He wrote, “If Bitcoin were to catch up to #Ethereum’s performance this year, the No. 1 crypto’s price would approach $100,000. Though we see Bitcoin on that path, there appears little can stop the process of Ethereum flippening.”

On top of this, some people are proposing that Ethereum will flip Bitcoin not too long after it transitions to proof-of-stake, which it’s set to do at some point early next year.

Source: Twitter

However, while a growing number of people are getting excited about Ethereum and its potential flippening of Bitcoin, some are getting excited about other altcoins, as well as their own potential flippening of Ethereum.

Looking at Solana, for instance, it has risen in price by 54% in the past seven days and by nearly 100% in the past fortnight, far outpacing ETH. Because of this, some SOL fans have suggested that Solana has itself begun flippening the older platform. Similarly, certain people have also said similar things about Cardano, Polkadot or Binance Smart Chain (or Avalanche) flippening Ethereum.

Admittedly, many of these coins have risen faster in price than ETH in recent weeks and months. That said, Ethereum remains by far and away the largest blockchain in terms of use and dapps, and even if we do see faster proportional price rises every now and again, other altcoins really have their work cut out if they want to catch up with it. As for Ethereum itself, it is now up to 47% of BTC’s total market cap, and given the amount of traffic it’s enjoying, it wouldn’t be a shock if it passes 100% in the not-too distant future.