Ethereum (ETH) could eventually overtake Bitcoin (BTC) in market value. This is what Tom Lee, chairman of BitMine and well-known crypto analyst, predicts. He draws a striking comparison with financial history: how the American stock market took over the role of gold after 1971.
Lee compares Ethereum to the rise of Wall Street
Speaking to ARK Invest director Cathie Wood, Lee said Ethereum “can flip Bitcoin like Wall Street flipped gold after 1971.” He refers to the so-called “Nixon Shock”, the moment when the United States disconnected the dollar from the gold standard.
According to Lee, that decision led to a huge shift. “When the dollar became fully synthetic, a market for gold emerged. “But Wall Street created products that made the dollar dominant,” he said. “Today the value of stock markets is $40 trillion, compared to $2 trillion for financial products linked to gold.”
Lee expects that Ethereum can play a similar role within the crypto world. “The dominance of the dollar grew to 80 percent of all financial transactions at the time,” he says. “The same opportunity now lies with Ethereum, because everything is going to be tokenized.”
Tokenization means that traditional assets, such as shares or real estate, are digitally recorded on the blockchain. According to Lee, that process has already started with stablecoins, and other forms of wealth will follow the same path in the future.
When the flipping almost became a reality
The discussion about a possible ‘flipping’, the moment when Ethereum will have a larger market cap than Bitcoin, has been going on for years. Ethereum currently has a market cap of around $445 billion, while Bitcoin is well above that at over $2.07 trillion.
Yet Ethereum has come remarkably close to overtaking Bitcoin in the past. During the so-called ICO boom in June 2017, a period with a wave of new crypto projects that raised money through ICOs, the difference between the two coins was only 17 percent. Ether’s price was around $400 at the time, and a rise to around $470 could have been enough to overtake Bitcoin.
At that time, Bitcoin’s market capitalization was around $44.3 billion, while Ethereum stood at around $36.8 billion. That period is known in the crypto world as the moment when ‘flippening’ came closest.
However, the euphoria was short-lived. In the following month, both coins lost about 60 percent of their value. Bitcoin then recovered quickly and rose to almost $20,000 by the end of that year. Ethereum also rose in value again, but was no longer able to close the previous gap with Bitcoin.
Source: https://newsbit.nl/analist-tom-lee-voorspelt-ethereum-gaat-bitcoin-inhalen/
