Ethereum's rapid growth indicates it may soon surpass Bitcoin in market capitalization and price, potentially transforming from digital gold to the backbone of the digital economy.

Ethereum has recently reclaimed a 944-day downtrend against Bitcoin, signaling a potential shift in market dominance.

Ethereum's deflationary monetary policy, driven by the EIP-1559 burn mechanism introduced in 2021, is a crucial factor in its ability to challenge Bitcoin.

Since EIP-1559's implementation, approximately 4.6 million ETH, worth around $13 billion, has been burned, and ETH's issuance has decreased by 88%, significantly reducing its circulating supply.

For Ethereum to overtake Bitcoin, it needs substantial institutional inflows, increased network activity that boosts ETH burning, and a reduction in liquid supply through staking, all creating upward price pressure.

Historically, Ethereum has outperformed Bitcoin immediately after Bitcoin peaks, with notable examples in 2017 and 2021, and recent market movements suggest a similar pattern could be emerging.

While Bitcoin shows signs of structural weakness, losing higher-timeframe trends, Ethereum continues its strong uptrend, forming higher lows and higher highs on the daily chart.