"Can Ethereum Catch Up to Bitcoin's Market Cap?"... Ethereum Surges 50% in One Month on Upgrade Boost

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The price of Ethereum, the leading altcoin, has recently shown a steep upward trend. This is due to the positive impact of the upgrade issue scheduled for September, raising expectations that it could surpass the market capitalization of Bitcoin, the representative cryptocurrency. However, while some argue that this rise is temporary, experts explain that macroeconomic indicators and Ethereum prices are interconnected beyond just the upgrade.

According to the global cryptocurrency market tracking site CoinMarketCap as of 8:50 a.m. on the 3rd, Ethereum's price was recorded at $1,644 (approximately 2.16 million KRW), up 0.77% from the previous day, marking a surge of over 33% in a month. Until early last month, Ethereum remained in the $1,000 range, but the upward trend continued, reaching the $1,700 range on the 29th of last month. Compared to a week ago, it rose more than 15%. This is a relatively steeper increase compared to Bitcoin’s price, which rose about 9% over the same week.

The sharp rise in Ethereum’s price reflects expectations for the Merge upgrade, tentatively proposed for September 19, as part of the Ethereum 2.0 update. This upgrade will change Ethereum’s creation method from the existing Proof of Work (PoW), which mines cryptocurrency through computer calculations, to Proof of Stake (PoS), where holders receive a certain proportion as rewards. It is also analyzed that this will increase transaction processing speed (TPS) and resolve carbon emission issues caused by mining.

Due to the upgrade, which can enhance Ethereum’s value, investors are even discussing the possibility of a 'Flippening,' where Ethereum’s market capitalization surpasses Bitcoin’s. So far, Ethereum has never overtaken Bitcoin in market capitalization. As of this date, Bitcoin’s market capitalization is $439.45181 billion (approximately 576.78 trillion KRW), while Ethereum’s is $198.86010 billion (approximately 261.03 trillion KRW), showing a difference of more than twice.

On June 18, 2017, Bitcoin’s share of the total cryptocurrency market capitalization was 39.17%, and Ethereum’s was 27.47%, narrowing the gap to 11.7 percentage points, but the gap widened afterward.

Although there are rosy forecasts for Ethereum, some argue that the recent rise is a short-term phenomenon. Crypto Sunmoon, a contributor at cryptocurrency data firm CryptoQuant, explained that if a long-term bull market begins with the update, the amount of Ethereum 2.0 staking should increase rapidly, but such movement is not observed. He pointed out, "It is necessary to be cautious of a decline before the Ethereum 2.0 update."

Staking refers to investors depositing their cryptocurrencies into the blockchain network to participate in the platform’s operation and reliability verification, receiving rewards in return. To participate in Ethereum 2.0 staking, at least 32 Ethereum must be deposited into the network. According to CryptoQuant, the total amount of Ethereum deposited for Ethereum 2.0 staking was 12,979,344 at the beginning of last month and 12,991,648 as of the day before, showing only a 0.09% increase.

Furthermore, although the Merge upgrade has been a major issue, consideration of macroeconomic indicators is also advised. Choi Yoon-young, a researcher at the Korbit Research Center, said, "The market is preemptively reflecting expectations for the Merge upgrade, applying upward pressure on Ethereum’s price," but added, "While the Ethereum Merge upgrade will be one of the major issues, it is difficult to conclude that it is the 'biggest' factor affecting price movements."

She continued, "Ethereum upgrades have been postponed several times, causing price adjustments," and added, "Since the schedule is set for September 19, it acts as a factor for price increase, but it should be considered that the virtual asset market is intertwined with macroeconomic indicators such as interest rates and liquidity."

This content was produced with the assistance of AI translation services.