Will Ethereum surpass Bitcoin in market capitalization?
Last night, Bitcoin stood at $20,000, which completely opened up room for growth. The next thing everyone cares about is probably the trend of other currencies.
Let's talk about Ethereum today.
Many readers have left messages asking me whether the market value of Ethereum may exceed that of Bitcoin. Now that Bitcoin has broken through the previous high, if Ethereum can still have this imagination, the increase will be unimaginable.
As of writing, Bitcoin has a market cap of $424.2 billion and Ethereum has a market cap of $73 billion. If calculated according to the current price, the market value of Ethereum should catch up with or even exceed that of Bitcoin, and its price should be at least 6 times that of the current price, reaching $3,852.
Assuming that this situation can really happen, I think there is a high probability that it will happen in the middle and late stages of the bull market when it is close to madness, because the middle and late stages of the bull market are often the catalyst for turning points or miracles. In the middle and late stages of the bull market, the price of Bitcoin will be higher than it is now, so the price of Ethereum will be higher than $3,852 at that time.
This deduction seems a bit unbelievable now, but I think it is very likely to become a reality-as long as there are no major accidents or disasters in the development of Ethereum, I believe that the market value of Ethereum will surpass Bitcoin at some point in the future. Currency, the currency price has reached a position that we can't even imagine today.
From the launch of Bitcoin in 2009 to the present, the positioning and consensus of Bitcoin have long been separated from the peer-to-peer payment tool that Satoshi Nakamoto once envisioned, but have become "digital gold" and a tool for value storage. Whether it is an old player in the currency circle or an institutional investor who has bought bitcoin this year and practitioners in the traditional financial industry, almost all regard bitcoin as "digital gold".
In a promotional video produced by Grayscale Capital, it directly regards Bitcoin as a competitor and substitute for gold. This kind of publicity and awareness will definitely become more and more popular, and become the strongest consensus of Bitcoin.
If Bitcoin is gold, then the relative Ethereum is oil in my opinion. I wrote this point of view in last year's article "BTC is the gold of the encrypted world, and Ethereum is the oil of the encrypted world".
At that time, the entire digital currency market was still in a bear market, and there were very few applications in the Ethereum ecosystem. But now, especially after this round of DeFi fermentation this year, many players have participated in activities such as liquidity mining and mortgages, and have personally experienced the various inconveniences caused by high Gas fees, and the characteristics of Ethereum Petroleum are even more obvious.
If Bitcoin corresponds to gold and Ethereum corresponds to oil, what is the market value of gold and oil?
As of August 17, 2020, the total market capitalization of gold is about $9 trillion. According to the data of the International Energy Agency, under normal circumstances, the total annual demand for oil is about 35 billion barrels, and the current price of a barrel of oil is about 46 US dollars. Therefore, the annual oil consumption is about 1.6 trillion US dollars, which is equivalent to every The oil consumed in 6 years is worth the total market value of gold.
Therefore, based on this data and analogy, the market value of Ethereum is likely to exceed that of Bitcoin.
But if the market value of Ethereum exceeds that of Bitcoin, it means that the price of Ethereum will be at least 6 times the current price, which means that the application fee on Ethereum will be higher than the price at the peak of DeFi It may be 6 times or more expensive.
But if the Ethereum fee is so high, how many people will participate in the application of Ethereum? How can the future ecology of Ethereum prosper if no one participates in these applications?
This has become an unavoidable problem and an obstacle that must be overcome.
If there is only one feasible path to break through this obstacle: the performance of Ethereum must be greatly improved, so that a large number of applications do not need to run on the Ethereum mainnet in the future, thereby avoiding the direct payment of Gas fees. This is exactly the approach of Ethereum's revised new roadmap-to expand Ethereum with Rollup as the main line.
If this new version of the roadmap is implemented, a large number of applications in the future will not need to run directly on Ethereum, but will run in the second layer of expansion, and there will be no need to pay frequent fees. At that time, even if the currency price of Ethereum is high, the impact on handling fees will be greatly reduced.
Therefore, I think that there is a high probability that the market value of Ethereum will exceed that of Bitcoin and stabilize after the Rollup expansion is successfully realized. This time point will most likely be 4 years later.
According to my speculation, this market may reach its climax at the end of next year or early next year. So is it possible that the market value of Ethereum will surpass that of Bitcoin at the end of next year or early next year? This is difficult to estimate, but if it really exceeds, I think it is not a good thing, because the current technology and application scenarios do not support this situation, and it may be a clear signal that the bubble is about to burst.
