TokenInsight: Can Ethereum surpass Bitcoin?

Summary

• Driven by support from Wall Street and continued increases in corporate treasuries, the debate over whether Ethereum could surpass Bitcoin has resurfaced.

• Bitcoin is seen as scarce, secure, and predictable "digital gold," suitable as a store of wealth; Ethereum, on the other hand, is considered a versatile, yield-generating "digital oil," powering the broader Web3 economy.

• Supporters argue that Ethereum's broader use cases, continued adoption by institutions and corporate treasuries, and incremental contraction driven by proof of stake, fee mechanisms, and stake lock-up could make ETH even more scarce than BTC, giving it the potential to overtake.

• Skeptics argue that Bitcoin's simplicity, stability, and unique status as a means of value give it an inherent defensive advantage; while Ethereum faces challenges such as protocol uncertainty, increased complexity and security trade-offs, and fierce competition among smart contract platforms. Introduction: Speculation Rises about Ethereum Surpassing Bitcoin Since its inception, Bitcoin has consistently held the largest share of the cryptocurrency market and remains the cryptocurrency with the highest market capitalization, while Ethereum has consistently held second place. Bitcoin's dominance appears unshakable, but recent developments have reignited debate over whether Ethereum can ultimately dethrone it. Prominent analysts are bullish on Ethereum. Fundstrat co-founder Tom Lee believes Ethereum is experiencing its "2017 Bitcoin moment," indicating it is poised for a wave of mass adoption. Lee predicts that, given Wall Street's accelerated adoption and Ethereum's position in blockchain finance, Ethereum could deliver a 100x return in the long term, even surpassing Bitcoin's valuation. An emerging trend is companies adding ETH to their balance sheets due to its unique advantages. Smaller, publicly traded companies are choosing ETH as a reserve asset because it sits in a golden area between credibility and growth potential. It is worth noting that holding ETH can generate active returns: Unlike Bitcoin, which is held purely for price appreciation, Ethereum's Proof of Stake (PoS) mechanism allows holders to earn an annualized return of 3% to 4% through staking. This income narrative positioning ETH as an income-generating asset makes it extremely attractive to "tech-oriented" investors seeking upside and returns.
  

  Bitcoin vs. Ethereum: A Comparison of Value Propositions

  

  Bitcoin’s Value Proposition – Digital Gold
  

  Bitcoin is often referred to as “digital gold” due to its role as a store of value and its inherent scarcity.

  There will only ever be 21 million Bitcoins, making their scarcity and predictability compelling. The Bitcoin network is secured by a Proof-of-Work (PoW) mechanism, making it extremely secure and decentralized. Its simplicity is a major advantage—Bitcoin focuses on one thing: storing value in a censorship-resistant manner. Over 14 years, it has established a strong brand as the first cryptocurrency with the largest market capitalization. This endurance and clear positioning have led to widespread institutional adoption of Bitcoin—from hedge funds to countries—as a hedge against inflation and macroeconomic uncertainty. Bitcoin's conservative community (reluctant to change the protocol rules) ensures the asset's stability and predictability, qualities that attract institutions and long-term holders. In short, Bitcoin is the reserve asset among cryptocurrencies, prized for its scarcity, security, and trustworthiness. Ethereum's Value Proposition: Digital Oil for the Digital Economy In contrast, Ethereum is a versatile platform often compared to digital oil because it powers the entire cryptocurrency application economy. As the leading smart contract blockchain, the Ethereum network serves as the foundational layer for decentralized finance (DeFi) protocols, non-fungible token (NFT) markets, stablecoins, games, and more. This means that ETH is not only a store of value but also the "fuel" consumed by transactions and programs running on the network. Ethereum currently uses a Proof-of-Stake (PoS) consensus mechanism, allowing investors to stake ETH and earn a yield (3-4% annualized) by maintaining network security. This yield-generating property gives ETH, in addition to its utility, similar characteristics to bonds. While Ethereum's supply is uncapped, since the implementation of the fee burn mechanism (EIP-1559) in 2021 and the completion of the merge in 2022, it has exhibited deflationary behavior in certain periods, with more ETH being destroyed than newly issued. Overall, Ethereum's value stems from its versatility and continuous innovation—as a programmable platform upon which numerous digital assets and services are built, it is essential to the thriving Web3 economy. Arguments for Ethereum's Surpassing Bitcoin Some analysts believe Ethereum's growing influence could eventually lead it to surpass Bitcoin. Key arguments supporting this potential trend include: Wider Utility and Demand Ethereum's functionality far exceeds Bitcoin's. Its blockchain hosts thousands of decentralized applications and processes far more transactions daily than Bitcoin, resulting in higher on-chain activity and fees. This widespread utility—from supporting DeFi lending and trading to NFTs and stablecoins—means that demand for Ethereum extends far beyond investment. In other words, Ethereum is a key input into cryptoeconomic activity, not just a store of value. If the digital economy built on Ethereum continues to expand, demand for Ethereum could surpass that of Bitcoin. Institutional Adoption and Reserve Assets: In 2025, a wave of "Ethereum Treasuries" companies emerged. For example, BitMine Immersion Technologies began accumulating ETH at an unprecedented rate, acquiring over 1 million ETH in just 27 days. Overall, publicly disclosed corporate ETH holdings soared—reaching over 1 million by mid-2025, compared to just 116,000 just a few months prior. Attracted by Ethereum's growth potential and staking returns, these companies effectively turned their corporate treasuries into yield-generating investments. Favorable Supply Dynamics: Ethereum's monetary policy became increasingly tight. Following the transition to Proof-of-Stake (PoS), Ethereum's net issuance declined dramatically (with new ETH reduced by over 90%). Furthermore, EIP-1559's fee burning mechanism means that high network usage effectively destroys ETH, sometimes even leading to supply deflation. This stands in stark contrast to Bitcoin's fixed inflation schedule, where mining continues until 2140. During periods of peak usage, ETH's supply may actually decrease, such as when token burns exceed issuance. Many Ethereum supporters believe that this could, in practice, make ETH more scarce than Bitcoin, especially if demand grows. The combination of lower inflation, potential deflation, and staking lockup (over 30% of Ethereum's supply is currently locked in staking contracts, reducing the circulating supply) could cause Ethereum's effective supply to tighten faster than Bitcoin's. This scarcity, combined with its utility, could drive Ethereum's price up relative to Bitcoin.
  

  Arguments Against Ethereum Overtaking Bitcoin

  Critics of Ethereum's potential to surpass Bitcoin point to Bitcoin's potential to maintain its dominance, while also highlighting the obstacles Ethereum faces. Key arguments against Ethereum surpassing Bitcoin include:

  Bitcoin's simplicity, stability, and first-mover advantage

  Bitcoin's single purpose as sound money is seen as a strength that underpins its dominance. It is simple, robust, and trustworthy. As the first cryptocurrency, its stability (no significant changes to its rules or operating methods since its inception) inspires confidence that it will continue to be a reliable store of value. While Ethereum's ever-changing nature is innovative, it can also be seen as a risk—changes such as monetary policy adjustments or technological upgrades introduce uncertainty. Bitcoin's stable position and conservative design make it a safe choice for large investors. Ethereum's complexity and security trade-off: Ethereum's feature-rich nature also means a larger attack surface and greater potential for error. Smart contracts on Ethereum are susceptible to hacks and vulnerabilities. While this isn't a flaw in Ethereum's underlying layer, it can undermine confidence and harm the ecosystem. Running an Ethereum node requires more resources than a Bitcoin node, and the long-term implications of Ethereum's shift to proof-of-stake (PoS) remain controversial, including the potential for centralization and the lack of clarity surrounding its economic model for decades to come. Bitcoin's design—simple and immutable—arguably offers a more proven track record for its single purpose of storing value. Competition among smart contract platforms is fierce. Ethereum competes with numerous other smart contract platforms (Solana, Sui, Cardano, Bitcoin Scenario, etc.), all vying for a share of the digital economy. Bitcoin's niche market is more monopolistic—no other network poses a serious challenge to it as a store of value chain. Ethereum, on the other hand, must maintain its dominance amidst competition from numerous "Ethereum killers." Future technological changes or regulations that favor other protocols could hinder Ethereum's path to surpassing Bitcoin. In short, Bitcoin's focused positioning and lack of direct competition in its category give it a certain defensive advantage. Conclusion: In summary, Bitcoin and Ethereum occupy different positions in the cryptocurrency landscape. Bitcoin is like gold: a relatively niche asset (in terms of utility), but a dominant store of value. It's valued for its simplicity, scarcity, and security—much like gold is valued despite its mostly inert state. Meanwhile, Ethereum powers the broader economy, akin to oil or infrastructure in the digital economy.

  ETH's value stems not just from holding it but also from using it—to run applications, facilitate transactions, and generate yield in the DeFi ecosystem. This fundamental difference means the two assets can coexist and perform differently under various conditions.

  The question of "surpassing" ultimately comes down to time and maturity. Bitcoin's narrative is mature and structurally entrenched; Ethereum's narrative is still evolving with the development of Web3. The digital economy that Ethereum is designed to support is still in its early stages. It may take years for DeFi and Web3 applications to reach a scale large enough to justify Ethereum's value to the world exceeding Bitcoin's market capitalization.