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Ether Eyes Bitcoin’s Crypto Crown as ‘Merge’ Upgrade Looms

Ethereum has surged 65% since June as it nears a software upgrade to reduce its power usage. Some bet that if the ‘Merge’ this week is successful it could even challenge bitcoin


The value of ethereum has surged in recent months as the nears its 'Merge' to reduce power consumption.
The value of ethereum has surged in recent months as the nears its 'Merge' to reduce power consumption. File photo: Reuters

 

The value of Ethereum has surged 65% over the past 10 weeks as the second biggest cryptocurrency nears its “Merge” software upgrade, which is expected to take place this week.

The move, if it is successful, aims to sharply reduce the energy usage of Ethereum’s blockchain, and some investors are speculating that it could help the ether challenge its ‘big brother’ bitcoin.

Bitcoin’s dominance, or its share of the crypto market’s market value, has slipped to 39% from this year’s peak of 47.5% in mid-June, according to data platform CoinMarketCap.

Ether, on the other hand, has climbed to 20.5% from 16%.

The upstart is still a long way from overtaking bitcoin as the No-1 cryptocurrency, a reversal known to aficionados as “the flippening”. But it has certainly made up ground – in January 2021, bitcoin reigned supreme at 72%, while ether occupied a slender 10%.

In regard to price, one ether is now worth 0.082 bitcoin, near December 2021 highs and sharply above the 2022 low of 0.049 in June.

“People are now viewing Ethereum as essentially a safe asset because they’ve seen the success of the network, they think it’s not going anywhere,” said Joseph Edwards, head of financial strategy at fund management firm Solrise Finance.

“There’s a permanency to how Ethereum is perceived in the crypto ecosystem.”

 

Bitcoin dominance wanes

 

 

Ether up 65% Since End-June

The Merge, expected to take place on Thursday after several delays, could lead to wider use of the blockchain, potentially boosting ether’s price – although nothing is certain in a capricious crypto market.

Ethereum forms the backbone of much of the “Web3” vision of an internet where crypto takes centre stage, powering applications involving crypto offshoots such as decentralised finance and non-fungible tokens, although this much-hyped dream is still unrealised.

Bitcoin and ether have both nearly halved this year on concerns about supersized interest rate hikes from central banks.

Nonetheless, investors seem to like the look of the Merge, with ether up over 65% since the end of June. Bitcoin has barely budged in the same period.

“We’re going to see (ether’s) attractiveness to some investors who are concerned about energy consumption,” said Doug Schwenk, CEO of Digital Asset Research, although he cautioned that ether was still a long way behind bitcoin.

 

Bitcoin Still Strong

The diminishing bitcoin dominance in crypto’s current bear market is a departure from previous market cycles when investors sold lesser tokens – “altcoins” – in favor of the more liquid and reliable bitcoin.

Dethroning the king is no easy feat, though.

Bitcoin is still by far the most well-known cryptocurrency. Mainstream investors who have dipped their toes in the crypto market since 2020 have tended to turn first to bitcoin, as the most liquid and widely-traded token.

Its market cap of $427 billion is still more than double Ether’s $210 billion, and market participants firmly believe the original digital coin remains the gold standard in crypto due to its limited supply.

Some market players say bitcoin’s grip on the crypto crown is still strong, even if it has to accept other contenders.

For example, Hugo Xavier, CEO of K2 Trading Partners, said its dominance could improve to 50%-60% range if the crypto market turns bullish but it is unlikely to touch 70% again.

 

  • Reuters with additional editing by Jim Pollard

 

ALSO SEE:

 

Australia to do Crypto Stocktake Ahead of Regulatory Moves

 

 

Bitcoin Rise Shows Crypto Has Hit Floor – Business Insider

 

 

 

Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years and has a family in Bangkok.

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