At the time of writing, ETH sits at over $4,200 despite the catastrophic market crash witnessed on December 4 which liquidated open market positions worth more than $2.5 billion within 12 hours and diminished the total crypto market cap to $2.3 trillion.
While all cryptocurrencies experienced a violent move downward amid the market crash, ETH fared relatively well. In fact, ether showed more resiliency compared to bitcoin (BTC) as the premier cryptocurrency crashed more than 17% compared to ETH tumbling about 13%.
Things get even more interesting when one observes the ETH/BTC chart as, during the crash, we saw ETH clearly outperform BTC to the extent that it started to break out. At the time of writing, ETH/BTC trades at 0.085 which essentially translates to 0.085 BTC for 1 ETH.
However, when we observe the ETH/BTC chart on a weekly time frame, we see a clear breakout that has fueled speculations for the highly-anticipated ‘altseason’ that is typically marked with the prices of altcoins going parabolic in a short span of time.
The encouraging chart pattern along with the rising utility of ETH begs the question: will the infamous ‘flippening’ finally happen this bull cycle? Or is it just a precursor to a wider market crash as we experienced at the peak of the 2017-18 bull market?
In this article, we make a case for how ether could finally be on its way to flip bitcoin in terms of market cap on the back of rising use-cases across different landscapes in the crypto industry.
What Are Ether’s Use-Cases?
To begin, ether powers the vast majority of all crypto-financial activities. These activities include serving as the currency and base layer for settlement for all decentralized finance (DeFi) products, non-fungible tokens (NFTs), and several other use-cases.
Considering the scope of this article, we will limit our focus to ETH’s use in the DeFi and NFT landscapes.
We will also focus on how the launch of the long-awaited Ethereum scaling solutions further adds to the bullish case for ETH.
ETH Undergirds the DeFi Industry
The total value locked (TVL) of digital assets in various DeFi protocols today sits in excess of $255 billion and with the continual inflow of fresh capital into the space, a cumulative TVL of $1 trillion does not look that far-fetched.
(Source: DeFi Llama)
Out of the $255 billion worth of digital assets locked, more than $165 billion is parked into the Ethereum DeFi ecosystem. This hardly comes as a surprise as the Ethereum blockchain was the first smart contract platform to make DeFi a reality as was evident during the famous ‘DeFI summer’ of 2020.
(Source: DeFi Llama)
Ethereum is also home to virtually all of the top and pioneering DeFi protocols such as Maker, Curve Finance, Compound, Uniswap, Aave, and others.
The rising popularity of the so-called ‘DeFi 2.0’ protocols such as Abracadabra Money (SPELL) has further cemented Ethereum as the hotbed for innovation — an element that seems to be missing from all other competing layer 1 smart contracts platforms.
Ethereum is Home to the Largest NFT Marketplace
Ethereum also happens to host the world’s most popular and largest NFT collections in CryptoPunks, Bored Ape Yacht Club, Etherock, and others.
Today, the NFT space has ballooned into a multi-billion dollar industry and with an increasing number of artists and celebrities joining the digital art bandwagon, expect NFTs to continue gaining more traction in the coming years.
For example, the official Twitter handle of Adidas recently changed its profile picture to a Bored Ape NFT.
The surging popularity of NFTs can be gauged from the fact that the leading Ethereum NFT marketplace, OpenSea reported in November that its cumulative NFT trading volume had exceeded $10 billion in under three months.
As Ethereum gas fees get cheaper, which we discuss in the final section of the article, one can expect the NFT movement to transform from pure hype into a cultural phenomenon.
Doing Away with High Gas Fees for Good
A major hurdle hindering Ethereum’s wider adoption is its sky-high transaction fees. For example, during the recent December 4 crash a simple token swap transaction on Uniswap would have charged to the north of $300 which is simply unfeasible for an average user.
That being said, high gas fees could soon be a thing of history for Ethereum with the launch of optimistic roll-up solutions such as Optimism and Arbitrum. For instance, Arbitrum already boasts of a TVL of more than $2.3 billion, according to data from L2 Beat.
Further, the upcoming launch of zk-rollups solutions such as ZKSync promises to bring down the cost of Ethereum-based transactions in cents.
At present, we already have Ethereum scaling solutions such as Polygon and STARKware that are enabling users to enjoy the benefits of the Ethereum blockchain without putting a huge dent in their pockets.
Accordingly, if the upcoming launches of zk-rollups are timely, then there are more chances of Ethereum further extending its lead over its competitors rather than the latter catching up to the largest smart contract platform.
For comparison’s sake, Ethereum’s total market cap currently sits at $502 billion, while Binance Smart Chain, Solana, Cardano, and Polkadot command a market cap of $97 billion, $61 billion, $44 billion, and $30 billion, respectively.