For years analysts have predicted that ETH’s market capitalization will flip BTC’s but data shows it's still nothing more than a guessing game. After a 13% rise in two days, Bitcoin's (BTC) market capitalization surpassed $800 billion to reach its highest value in 79 days. During the same timeframe, Ether (ETH) accumulated a 45% gain in two weeks, placing the network's market capitalization at $340 billion.
Positive expectations for the London hard fork and its potential deflationary effect undoubtedly played a role, but some investors continue to question how Ether's valuation stacks against Bitcoin. Some, including Pantera Capital CEO Dan Morehead, expect Ether to outpace Bitcoin as the largest cryptocurrency.
Market participants may have also been excited after Minneapolis Federal Reserve President Neel Kashkari suggested that the Fed may stick with the asset-purchase program a bit longer. The reason cited was the Delta variant's spread and its potential harm to the labor market.
Kashkari said: "Delta could discourage people from returning to jobs that require in-person interaction and keep kids out of schools."
Extending the stimulus for longer raises the inflationary risk, which increases the attractiveness of scarce assets like real estate, commodities, stocks, and cryptocurrencies. However, the impact of these macroeconomic changes should equally impact Bitcoin and Ether.
Comparing some of Ethereum's metrics could shed some light on whether Ether's 58% discount is justified. The first step should be to measure the number of active addresses, excluding low amounts. As shown above, Bitcoin has 6 million addresses worth $1,000 or higher, and 3.67 million have been created since 2020. Meanwhile, Ether has less than half at 2.7 million addresses with $1,000. The altcoin's growth has also been slower, with 2.4 million of those created since 2020.
This metric is 55% lower for Ether, and this corroborates the market capitalization gap. However, this analysis does not include how much large clients have invested. Although there is no good way to estimate this number, measuring cryptocurrency exchange-traded products could be a good proxy.
After aggregating data from multiple exchange-traded instruments, the result is telling. Bitcoin dominates with $32.3 billion in assets under management, while Ether totals $11.7 billion. Grayscale GBTC plays a vital role in this discrepancy because its product was launched in September 2013.
Meanwhile, Ether's first exchange-traded product came in October 2017, when the XBT Provider Ether Tracker was launched. This difference partially explains why Ether's total is 64% lower than Bitcoin's.
Lastly, one should compare the futures markets data. Open interest is the best metric of professional investors' actual positions because it measures market participants' total number of contracts. An investor could have bought $50 million worth of Bitcoin futures open interest currently amounts to $14.2 billion, down from a $27.7 billion peak on April 13. Binance exchange leads with $3.4 billion, followed by FTX with another $2.3 billion.
On the other hand, the open interest on Ether futures peaked about a month later at $10.8 billion, and the indicator currently stands at $7.6 billion. Therefore, it is 46% lower than Bitcoin's, which further explains the valuation discount. Other metrics like on-chain data and miner revenues show a more balanced situation, but both cryptocurrencies have different use cases. For example, 54% of the Bitcoin supply has remained untouched for longer than one year.
The truth is that any indicator has a downside, and there is no definitive valuation metric to determine whether a cryptocurrency is above or below its fair value. However, the three metrics analyzed suggest that Ether's upside, when priced in Bitcoin, does not signal a "flippening" anytime soon.
|#||Crypto||Prediction||Accuracy||CVIX||Price||24h||7d||Market Cap||7d price change|
|1||BTC||Bitcoin predictions||72.4%||54||$28 074.88||1.42%||6.75%||$542 595 098 494|
|2||ETH||Ethereum predictions||78.4%||39||$1 789.03||1.69%||3.73%||$218 931 127 624|
|3||USDT||Tether predictions||94.4%||1||$1.000964||-0.12%||-0.14%||$78 561 748 618|
|4||BNB||Binance Coin predictions||72%||51||$322.80||-1.05%||-3.47%||$50 967 622 478|
|5||USDC||USD Coin predictions||93.2%||2||$0.999332||0.02%||-0.05%||$34 397 234 540|
|6||XRP||XRP predictions||88%||21||$0.428007||-3.02%||15.55%||$21 807 340 661|
|7||HEX||HEX predictions||62%||82||$0.099118||-21.02%||13.72%||$17 188 210 128|
|8||ADA||Cardano predictions||77.2%||44||$0.362034||-3.18%||7.81%||$12 570 250 725|
|9||STETH||Lido stETH predictions||95.2%||1||$2 941.39||-0.40%||-3.32%||$10 258 752 564|
|10||DOGE||Dogecoin predictions||74.4%||51||$0.075197||-3.32%||0.49%||$9 976 470 500|
|11||MATIC||Polygon predictions||77.6%||48||$1.11||-0.93%||-6.66%||$9 736 000 748|
|12||SOL||Solana predictions||72.8%||52||$21.64||-0.41%||7.14%||$8 304 203 236|
|13||BUSD||Binance USD predictions||96%||1||$0.999552||-0.04%||-0.16%||$8 060 405 263|
|14||DOT||Polkadot predictions||76.4%||49||$6.15||-0.66%||-3.23%||$7 188 099 699|
|15||LTC||Litecoin predictions||71.2%||59||$91.84||1.13%||11.76%||$6 663 269 575|
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