Share this article
FSInsight: Ether May Well Surpass Bitcoin’s Market Cap in Next 12 Months
If the blockchain’s Merge occurs as planned, the ether issuance rate will drop and daily selling pressure will reduce, the research firm said.
By Will Canny
Updated May 11, 2023, 6:03 p.m. Published Aug 16, 2022, 9:42 a.m.
Make us preferred on Google
Ether has a good chance of exceeding bitcoin in market cap over the next 12 months because the Ethereum blockchain’s switch to a proof-of-stake (PoS) mechanism will reduce both the production of the tokens and selling pressure from miners, research firm FSInsight said in a recent report.
Once the transition, known as the Merge, is completed, the “inflation rate of supply will decline” and selling pressure from miners will be “locked at zero,” the research firm said. Bitcoin has a market cap of about $461 billion, CoinDesk data shows, compared with Ethereum's $226 billion.
STORY CONTINUES BELOW
Don't miss another story.Subscribe to the Crypto Daybook Americas Newsletter today. See all newsletters
There are widespread misconceptions that PoS validation will allow Ethereum to scale better. However, this is false because the blockchain will still be relatively expensive at the base layer, the report said. The main purpose is to reduce energy consumption by 99.9% and to allow more users to contribute to block production, Sean Farell, head of digital asset strategy at FSInsight, wrote in the report. The switch from proof-of-work (PoW) is the first of five planned upgrades for the blockchain, and is provisionally expected to happen in September.
FSInsight said that while it is likely there will be some secondary market selling pressure from investors looking to reduce their risk exposure after the completion of the Merge, as the network settles “flow imbalances from a deflationary supply have the potential to be incredibly constructive for price.”
“Merge-adjacent” names, which include Lido's LDO token, Rocket Pool's RPL, Optimism's OP and Polygon's MATIC are attractive opportunities for “high-beta” exposure to the process, the note added.
Read more: JPMorgan: Ethereum Miners Face an Abrupt Change Following the Merge
More For You
Robinhood misses Q4 revenue estimates as fourth-quarter results dinged by crypto slump
Crypto revenue fell 38% year over year to $221M, even as the company expanded token listings and crypto features across its platform.
What to know:
- Robinhood’s fourth quarter earnings per share of $0.66 topped estimates for $0.63, but revenue of $1.28 billion fell shy of forecasts for $1.33 billion.
- The crypto slump paid a large part in the miss, with crypto revenue falling 38% from a year earlier to $221 million.
- Robinhood’s results mirror broader crypto-market weakness, which is also expected to weigh on rival Coinbase (COIN), and HOOD shares fell about 7% in post-market trading after the earnings release.
Top Stories
