• Ethereum is the eternal second behind Bitcoin – that is a kind of primal state for many, but it is not fixed for all times, because Ethereum has caught up enormously.
• Some data suggests that Ethereum can indeed overtake Bitcoin but still lacks the independence needed to do so.

Bitcoin had a growth of 105 percent in 2021, but Ethereum had one of roughly 505 percent, nearly five times as big. The commonality is price appreciation. The price correlation also exists when prices are falling, as can be seen in the recent past. With the correlation between Bitcoin and other altcoins drastically falling, it is clear that Ethereum has already decoupled from the other altcoins. A Binance spokesperson comments:

It is important to see that Ethereum is no longer an altcoin, but is developing unique characteristics. Reasons for the latest surge are the growing Metaverse, GameFi, and NFT developments built on the ETH network.

Although Ethereum is still far from being fully decoupled, independence is no longer a utopia but a goal.

Ethereum on the road to independence

Igneus Terrenus of crypto exchange Bybit, stated in a Cointelegraph interview that the value of digital assets is ultimately determined by the investors. After more than six years of development and many smart contract applications built on Ethereum – including in the fields of DeFi and NFT – Ethereum has developed its own ecosystem, independent of Bitcoin, he said. He added:

As the demographics of the BTC- and ETH- camps continue to diverge, we also expect their respective price movements to gradually move even further apart.

Ethereum is uniquely positioned in the market

Orbs co-founder Netta Korin told Cointelegraph that Ethereum’s straight-line price rise since October suggests Ethereum may actually overtake Bitcoin. Ethereum has clearly proven to be “fuel for DApps,” she said. What is hardly noticed, she continued, is the fact that Ethereum has long since overtaken Bitcoin as the most widely used blockchain. Ethereum also shows better performance in recovering from market crashes, she said. The upcoming Eth2 upgrade will further improve the demand outlook, she added. Korin further said:

New supply and demand mechanisms of Ethereum and its position as a leading financial infrastructure and backbone for popular projects like MakerDAO and Uniswap make decoupling from ETH a real possibility.

Moreover, Ether could also prove to be an inflation hedge in the future, as investors’ efforts to escape inflation, which is likely to rise in 2022. This is another reason that could propel Ethereum to overtake Bitcoin to become the leading cryptocurrency.

Could Bitcoin respond to the competition?

Bitcoin big investors with a long-term perspective are unlikely to change their behavior pattern but continue to stick to Bitcoin, no matter what the charts look like. For that matter, Bitcoin is already considered an inflation hedge, a reputation Ethereum has yet to earn.

Ether’s growing market power has not escaped the notice of major banks. JPMorgan Chase recently commented that ETH might be a better choice than BTC. It said ETH’s five-fold increase over BTC in the past year has given it a market cap nearly half that of Bitcoin.

Related: Billionaire investor Ray Dalio admits holding Ethereum, urges investors to ditch fiat for crypto amid rising inflation

Crucially, however, Ethereum could gain a foothold in Web 3.0, although that may still be a few years away. There is a realistic chance that ETH will play a major role in decentralized Web 3.0.

Incidentally, the recently implemented London upgrade of the Ethereum network will result in making ETH deflationary, which is attractive to institutions and other large investors planning for the long term.