A week ago, Ethereum’s market cap reached 50 percent of Bitcoin’s. On June 12, Ethereum price reached $396, moving closer to Bitcoin’s current market cap of $46 bln.

Is “flipenning” about to happen?

The cryptocurrency industry, market and community are anticipating the “flipenning” or the possibility of Ethereum surpassing the market of Bitcoin. It is approximately $10 bln away from reaching the market of Bitcoin.

Before speculating on the possibility of Ethereum becoming the most dominant Blockchain network, it is important to consider whether its recent price rally can be justified. Has Ethereum demonstrated commercial success? Are actual users utilizing Ethereum to access decentralized applications? Or is it a completely speculative investment and not-so-smart money flowing into the market?

Objectively, Ethereum’s recent price rally has been mostly speculative. The vast majority of investors in South Korea, the largest Ethereum exchange market, do not have sufficient knowledge of the purpose, structure, technical intricacies and philosophy of the Ethereum network. Most investors can’t seem to differentiate Ethereum from Bitcoin when the two Blockchain networks fundamentally oppose each other in many ways.

Charlie Shrem, the COO of Jaxx, wrote:

“ETH is rising because new users want to "get rich quick with ICO's". They don't care about the ETH price, and they arent holding. All the supply gets locked by the ICO's in the contract. They won't sell because the price is rising. Demand grows, supply is reduced.”

Ethereum’s native token Ether was designed to be used as gas. It isn’t a cryptocurrency or a store of value, unlike other altcoins such as Ethereum Classic that have a fixed supply. Ethereum is based on an inflationary supply to ensure that the network is fueled by Ether, also referred to as gas, within the network.

Hence, investors purchasing Ether to utilize it as a currency because it settles much faster than Bitcoin transactions have failed to understand the purpose of Ether. Most investors have purchased Ether due to their overall enthusiasm and optimism toward the network. Very few investors have purchased Ether to participate in ICOs, to use it as a currency or to use it as gas to fuel decentralized applications.

What’s up with South Korea?

It is difficult to justify that the money flowing into the Ethereum market is not speculative because of major markets such as South Korea. In a recent interview, Vitalik Buterin emphasized that he had no idea why South Korea is the largest Ethereum exchange market. He noted that he is aware of the active Ethereum development community within China led by various consortia, educational institutions and conglomerates.

South Korea, in contrast, is simply the largest Ethereum exchange market because people are speculating on the value of Ethereum.

Over the past year, Ethereum has introduced a phenomenal method of raising investments for startups and companies called ICO. By offering unique tokens that are compatible with the Ethereum network and its token Ether, companies can raise capital without the involvement of intermediaries and mediators.

However, as prominent Bitcoin trader and cryptocurrency analyst WhalePanda noted in his blog post, the major factor that led Ethereum’s market cap to surge is the rising popularity of ICOs.

He noted:

“I do admit I didn’t see this Ethereum bubble coming, but then again I wrongly assumed that no startup would need or even dare to ask $50 million in funding and I also wrongly assumed that people would use common sense and that leading developers would speak out against this sort of practice. Quite the opposite it seems. Ethereum’s sole use case at the moment is ICOs and token creation.”

Evidently, ICOs are not the only sole use case of Ethereum. However, its recent price surge has been solely attributed to the growth of ICOs and the launch of the Enterprise Ethereum Alliance.

Ethereum offers an infrastructure and a level of flexibility which Bitcoin simply doesn’t. On the other hand, Bitcoin offers a store of value and a settlement network that is secure and that was designed to operate as money, down to its monetary supply.

Even if Ethereum’s market cap surpasses that of Bitcoin, investors shouldn’t consider Ethereum as a superior Blockchain network over Bitcoin. Vice versa, Bitcoin investors shouldn’t dismiss Ethereum because of its smaller market cap. The two Blockchain networks obviously offer features and infrastructures that are unique and are sought out by the market.