After weeks of torrid growth, it seems ether’s much-hyped ‘Flippening’ may be on the verge of falling short.

Just weeks ago, the cryptocurrency that powers the ethereum blockchain looked poised to become the world’s largest by market capitalization, making ethereum the most valuable public blockchain. But as the calendar turns to July, that trend appears to be becoming less of a certainty.

After peaking at nearly $415 in mid-June, ether’s price declined to roughly $300 yesterday, an approximately 27% drop from its all-time high. Further, with this decline, ethereum’s market cap fell to less than 70% of bitcoin’s, down from more than 82% mid-month.

At stake in this game of numbers is the position of market leader in the nascent blockchain sector, one that has long been dominated, and defined by, investment in the bitcoin protocol.

But while bitcoin, the first cryptocurrency to scale, has historically been the largest, its market share has been declining steadily, spurred in no small part by the growing use of ethereum.

The question now on many investor minds is will this trend continue and what’s next?

Bulls on parade

Previously, analysts have predicted that ether would inevitably surpass bitcoin, in some cases, going so far to estimate that this changing of the guard will take place in 2017.

And despite ether’s recent price woes, analysts largely still believe this will be the case.

Tim Enneking, managing director of cryptocurrency hedge fund Crypto Asset Fund, was firmly of the view that ether is on track to becoming the market leader.

Enneking told CoinDesk:

“Ethereum will still take over top spot in terms of market cap from bitcoin before the end of the year.”

In this light, he called ether’s recent price movements simply “a bit of consolidation before the next push”.

Marius Rupsys, a cryptocurrency trader and co-founder of fintech startup InvoicePool, offered a similar view. “I still believe that [ether] is moving to become largest by market cap. It will not happen in a day, but it is getting there,” he said.

Rupsys spoke to a few variables that could impact the price of bitcoin and ether, including bitcoin’s ongoing scaling dilemma, which he said could further push investors to other digital assets if progress stalls.

Bitcoin’s weakness

That said, it appears bitcoin’s ecosystem may be on the verge of making just that adjustment.

Various stakeholders in the bitcoin ecosystem have been working toward solving the block size challenge for some time, and the network may have finally found a solution in a proposal named Segwit2x.

The plan, which would both reduce the size of transactions and also make the blocks in bitcoin’s blockchain larger, recently attained the support of nearly 90% of bitcoin miners, meaning once the software is released, improvements could be swift.

Still, this is far from an inevitability, and there are still scenarios that could arise in which the bitcoin network, like ethereum’s last year, splits in two. This fact isn’t lost on investors, most of whom said the situation seems uncertain due to the several competing proposals for the network’s future.

Rupsys, for example, suggested that such uncertainty could push investment dollars to ether, should its developers be able to avoid similar issues.

“There might be many different scenarios how [the scaling dilemma] could unfold. Therefore I expect there will be quite some price volatility or maybe ‘flippening’ to other chains like ether,” he said. “This might be the event that makes ether more valuable than bitcoin by market cap.”

Jehan Chu, managing partner at Hong Kong-based cryptocurrency fund Jen Advisors, largely agreed, adding that the growing number of developers and users supporting ether could cause the alternative asset protocol to overtake bitcoin.

“With a possible split on the cards, it seems bitcoin’s days as the standard in crypto are numbered,” he said.

Still, others see the situation more positively. Charles Hayter, co-founder and CEO of cryptocurrency platform CryptoCompare, provided a more optimistic point of view on bitcoin’s ongoing scaling dilemma.

Hayter remarked:

“Bitcoin’s moves on the scaling front have given it a new lease of life. The ability for the miners to override the scaling debate issues and chart a path forward goes a long way to delivering a bright future for bitcoin.”

Coin-offering congestion

Adding depth to the argument is that, while bitcoin has been working to address its scaling challenge, ethereum has been struggling with problems of its own.

Recently, the network has been showing signs of strain as a rapid influx of investors seek to take part in initial coin offerings (ICOs), or investments in new cryptocurrency startups and projects that use the ether currency.

A perfect example is the high demand that was on display in a recent ICO for Status, an ethereum-based messaging app that drew 180,000 ether (more than $60m) in its first day before going on to raise even more.

Several analysts spoke to this offering and its impact on ether. “[The] Status ICO was too popular,” said Joe Lee, co-founder of Magnr. “[The] ethereum network froze up for 24 [hours] due to a flood of transactions.”

As a result, short sellers holding cash and ether on exchanges and margin trading platforms “cashed in” after a temporary liquidity panic, he said.

Iqbal Gandham, Managing Director at eToro, also spoke to this dynamic, though he said he suspects short-term issues will give way to what is a real use case for the ethereum network.

“We’re seeing a pullback because of the ICO,” he told CoinDesk. “Many people are using ethereum to purchase new coin offerings so we don’t see this as anything to panic about.”

Growing pains

Overall, it seems that the sentiment put forward by Gandham was the prevailing one.

Arthur Hayes, founder and CEO of leveraged cryptocurrency exchange BitMEX, for example, offered optimistic commentary on ether, framing it as a bump in the road to larger growth.

“Ether’s price is correcting as the network struggles to handle the volume of transactions due to the ICO craze,” he told CoinDesk, adding:

“In spite of these issues, the demand for new issues shows no signs of abating. This is a healthy correction during a strong rally.”

Gandham went on to address these struggles, emphasizing his belief that all new technologies encounter challenges, and maintaining that ethereum has been creating many new opportunities for entrepreneurs.

In spite of all this potential, he stated that it is not clear whether ether will end up surpassing bitcoin, though owing to the nascent market, he wasn’t bullish enough to say for sure.

Overall, Gandham notably demurred to a wait-and-see philosophy, one buoyed by the fact that, in the world of cryptocurrencies, no possibility is too far-fetched.

He concluded:

“It’s still too early in the development of the ethereum blockchain to say that it won’t catch up with bitcoin.”

Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Please conduct your own thorough research before investing in any cryptocurrency.

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