In addition, there is something that we must keep in mind, and that not every altcoin necessarily a competitor to bitcoin; a mistake that is, sadly, too often made.
There is little argument that bitcoin is on a fast road to glory. However, for many, that road isn’t fast enough – they’d prefer that bitcoin and other similar currencies make a faster breakthrough in popular usage. There is a fascinating trend, sadly, that bitcoin’s share in the total cryptocurrency market cap is steadily reducing. At the time this article is written, the share was close to 81%; bear in mind that it used to be as high as 95% (or even more) in January 2014. That’s a 14% drop in just three years.
Bitcoin sat at the cryptocurrency throne for many years now. That shouldn’t come as a surprise: it was one of the first and most lauded online currencies. That doesn’t seem to last – several altcoins have proven again and again that they vie for the high position as well among speculators and traders. Now, we mustn’t ignore the fact that these new currencies have use cases, but that is a far cry from actually being useless; they are just perfect for value speculation. Therefore, money is slowly draining away from bitcoin right into altcoin’s lap, and the trend doesn’t seem to stop; in fact, it is getting faster and faster.
Is bitcoin’s dwindling rate a bad thing? By all means, no. The reason is simple: free market, and all the benefits that we reap from it. The diversification of the currencies is all we could wish for. Remember, despite the fact that bitcoin’s crown as a major cryptocurrency is slowly sliding down, it still reigns supreme. Way back in January 2014, bitcoin had a staggering 96% of cryptocurrency market cap – today, that share is mere (but still amazing) 84%. While many would claim that this change isn’t a big deal, it does show that some change is in the works. Good or bad, only time will tell.
Let us go through the history of bitcoin’s market cap. This isn’t a new event – the cycle repeats itself. The share dropped well below 80% in January 2015; the same occurred in June in 2016 and also later that year. However, what amazes us most with bitcoin it its staying power, as it successfully rebounded after each market drop. As expected, it can be assumed that it will happen this time as well. Do not drop your bitcoin holdings for now – you might bitterly regret it. Of course, some investments may look tempting for the time being, but there’s still a lot of cause for caution.
What causes these wild ups and downs in bitcoin’s market presence? Well, many people like to cite high transaction fee problem. The fees are on a constant increase, which is why altcoin is getting so much popular – it has considerably lower fees. However, for all its worth, altcoin presents poor competition to bitcoin’s high transaction volume. Until altcoin increases its daily transaction volume, we cannot say for sure which currency will be able to hold its own costs down the road. If bitcoin would reduce its cost, it would be the top cryptocurrency for ages to come.
In addition, remember that not every altcoin is necessarily a bitcoin competitor. For example, take Ethereum. It has no impetus to become a currency the way bitcoin has. The same holds true for Ripple, because it focuses primarily on technology that produces bank software. On the other hand, both Dash and Montero are, in fact, bitcoin competitors, but the anonymity features they have can be off-putting for many.
Based on everything that has been outlined so far, what do you personally think about the trend of the lowering market cap? Do you think that this has something to do with the failure of approving the Bitcoin ETF project initiated by the Winklevoss twins? Let us know your thoughts in the comment section below.