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Can Ethereum “Flip” Bitcoin? Some Tremors Beneath the Surface

ether (ETH USD) price performance is storming out above Bitcoin (BTC USD) this past month… But there are some signs of a potential “flippening” you may NOT have heard. Here are all the top stories in today’s New Digital World.

Source: Marisha / Shutterstock.com

Can Ethereum “Flip” Bitcoin?

Probably every crypto aims to graduate from so-called altcoin – and “flip” bitcoin to become the new top dog. So far, only ETH comes close…

Yet ETH is definitely #2 by market cap: $198 billion to BTC’s $440 billion, as I write. And it has yet to catch up on long-term performance… (Although it’s certainly blowing away BTC on the 30-day timeframe: +54% to +20%!)

But there are some signs of a “flippening” from BTC to ETH here in August, as Ethereum developers prepare for the big “merge” to proof-of-stake next month:

“At Deribit, we see a lot of post-Merge options open interest being created” for ETH, as an executive for the crypto-options exchange told CoinDesk yesterday.

In fact, ETH has actually overtaken BTC on that front:

“The cumulative dollar value of ether options contracts opens on dominant exchange Deribit was $5.7 billion, or 32% higher, than $4.3 billion locked in open bitcoin options trades.”

As for the put-call ratio, BTC was at 0.5 while ETH clocked in at 0.26, “and year-end expiry even again 50% lower at 0.12,” said Deribit. In other words, options holders are four times more bullish on ETH than BTC heading into 2023!

Plus: Judging by traditional crypto trading at Coinbase (NASDAQ:COIN), ETH overtook BTC on trading volume, too, in late July:

Fourteen other cryptos, including Litecoin (LTC USD), Ethereum Classic (ETC USD) and Dogecoin (DOGE USD), added up to 9.9% of trading volumes in the last week of July.

Coinbase is more heavily dominated by institutional trading volumes than, say, binance (BNB USD)… So this could be a most useful read on Wall Street activity. Speaking of which…

Coinbase Opens Up ETH Staking to “Prime” Clients

“We’re launching Ethereum staking to US domestic institutional clients on Coinbase Prime,” the exchange announced Monday. “Using our industry-leading cold storage, clients can now generate yield by staking ETH.”

Coinbase’s blog post didn’t say how much yield, but elsewhere on the site, Coinbase gives 3.675% as the figure… Perhaps by staking your coins with Lido Stakes ETH (stETH-USD) before staking is available on Ethereum “officially,” post-Merge.

You can make more with Algorand, Cosmos, or Tezos; Coinbase says its staking rewards for those are 5.75%, 5.00% and 4.63%, respectively. But the Coinbase reward is pretty comparable with SOL (3.85%) and greater than ADA (2.60%).

bottom line: Nearly 4% simply to hold one of the biggest, safest blockchain networks and cryptos – that’s a good deal for many other investors than just Coinbase’s institutional clients, I’d wager. And the price action in ETH ahead of the merge is strong evidence for that.

Latest Regulatory Drama at Robinhood, Binance

Oh, Robinhood (NASDAQ:HOOD). Last year, your executives were hauled before Congress for the “payment for order flow” controversy… Now, it’s the New York Department of Financial Services that’s on your case.

And, specifically, for crypto: The regulators slapped Robinhood Crypto with a $30 million fine to New York State “for significant failures” in anti-money-laundering and cybersecurity rules.

This is like a tenth of quarterly revenues at Robinhood… But I’m willing to bet that it’s enough to make smaller crypto apps want to “invest the proper resources and attention to develop and maintain a culture of compliance,” as the NYDFS announcement scolds .

As for Robinhood: With revenues in free-fall and negative “earnings” piling up… I question if they’ll be able to quickly “transition from a manual transaction monitoring system that was inadequate for RHC’s size, customer profiles, and transaction volumes,” as New York State wants them to.

It’d help if these regulators went ahead and sorted out the tax-filing mess for crypto… The current situation puts you more in mind of a pile of spaghetti thrown at the wall than an orderly spreadsheet for your tax guy (or program).

Meanwhile: Binance US is pre-emptively responding to the SEC complaint about nine cryptos being unregistered securities – even though the complaint was against Coinbase, not them.

As of Aug. 15, you can no longer deposit or trade amp (AMP USD) on Binance US. As you can imagine, this has not been great for the price of AMP, an instant payments crypto. My colleague Brendan Rearick outlines why AMP may have become an SEC target in this great, concise explainer.

“Of those nine tokens, only Amp (AMP) is listed on the Binance.US platform,” according to Binance’s announcement yesterday. The other eight are fairly obscure, from where I’m sitting. They are:

  • Rally Network (RLY USD)
  • DerivativeDEX (DDX USD)
  • XYO (XYO USD)
  • Rari Capital (RGT USD)
  • Liechtenstein Cryptoassets Exchange (LCX-USD)
  • Powerledger (POWR-USD)
  • DFX Finance (DFX USD)
  • Kromatika Finance (KROM-USD)

Context: Adding up the market cap of all nine cryptos that the SEC singled out, I get $948.8 million. Not “billion,” like the Top 50 cryptos (individually). $948.8 million, even if all nine cryptos got wiped off the map tomorrow.

The Metaverse: A $50 Billion Market by 2026, Says Technavio

Growth of 20% in this economy? I’ll take it. And according to Technavio’s report, “Global Metaverse in Finance Market 2022-2026”… That growth should continue compounding at 20.93% annually.

Ultimately, metaverse hardware and software – for virtual reality and augmented reality experiences – should be a $50.4 billion industry by 2026.

Other highlights: The United States as well as Germany will be the hotspots, finds Technavio’s report finds. China is coming in hot, too, though.

Technavio even pointed to “the top seven metaverse wallets.” Those would be wallets from MetaMask, Enjin (ENJ-USD), Coinbase, math (MATH USD), alpha (ALPHA-USD), Coinomi and Trust Wallet, Cointelegraph reports.

In our own Ultimate Crypto portfolio, we’ve had great success with ENJ as well as The sandbox (SAND USD) over the past year or two. Our team just announced The Burn Coin With 10X Potential in a subscriber alert; you can get a free briefing on the strategy here and put it to work for you today.

On the date of publication, Ashley Cassell did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines. To have more news from The New Digital World sent to your inbox, click here to sign up for the newsletter.

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