In this file photo dated May 11, 2018, a man uses an Ethereum ATM next to a bitcoin ATM in Hong Kong. (KIN CHEUNG / FILE / AP)
For years, ether could barely dream of challenging its big brother bitcoin. Now, its ambitions may be becoming more realistic.
The second-biggest cryptocurrency is taking market share from bitcoin ahead of an all-important "Merge" software upgrade that could sharply reduce the energy usage of its Ethereum blockchain, should the developers pull it off in coming days.
Bitcoin's dominance, or its share of the crypto market's market value, has slipped to 39.1 percent from this year's peak of 47.5 percent in mid-June, according to data platform CoinMarketCap. Ether, on the other hand, has climbed to 20.5 percent from 16 percent
Bitcoin's dominance, or its share of the crypto market's market value, has slipped to 39.1 percent from this year's peak of 47.5 percent in mid-June, according to data platform CoinMarketCap. Ether, on the other hand, has climbed to 20.5 percent from 16 percent.
The upstart is still a long way from overtaking bitcoin as the No.1 cryptocurrency, a reversal known to aficionados as "the flippening". It's made up ground, though; in January 2021, bitcoin reigned supreme at 72 percent, while ether occupied a slender 10 percent.
ALSO READ: Cryptoverse: Bitcoin's no longer the king of the swingers
As for 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."
This Dec 17, 2020, photo shows a physical imitation of a Bitcoin at a cryptocurrency "Bitcoin Change" shop in Istanbul. (OZAN KOSE / AFP)
The Merge, expected to take place on Thursday after several delays, could lead to wider use of the Ethereum blockchain, potentially boosting ether's price – although nothing is certain in a capricious crypto market
Capricious crypto
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 percent 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.
ALSO READ: Bitcoin stems losses, pessimism reigns in crypto markets
This file photo taken on Jan 27, 2020 shows a physical imitation of a Ethereum cryptocurrency in Dortmund, western Germany. (INA FASSBENDER / AFP)
The king is strong
Bitcoin's 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
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.
READ MORE: Bitcoin, Ether hit records amid broad rally in cryptocurrencies
For example, Hugo Xavier, CEO of K2 Trading Partners, said its dominance could improve to 50-60 percent range if the crypto market turns bullish but it is unlikely to touch 70 percent again.