A month ago, Bitcoin capitalization accounted for over 60% of the crypto market. Unfortunately, Satoshi’s crypto dominance is declining at the industry level as it goes. Some forecasts go so far as to point to keeping the weight of BTC below the 50% threshold. For the greater good of the altcoins who take advantage of this to gain more importance on the stock market.
Is this paradigm shift actually bad for the industry?
From 72% to 48%, the weight of Bitcoin in the industry is in free fall
On April 22, the weight of BTC in the crypto industry drops to around 50%. Never seen on the market since 2018! Its share had even fallen below the threshold of 50% in the afternoon or 48% around 3 pm. Ether’s share had climbed as it accounted for over 14% of the market.
Yet as of January 31, Bitcoin alone represented 72.02% of the cryptocurrency market ( see graphic above). Its dominance began to decrease in February when its share lost nearly 10% in the space of a month. If in March, the BTC maintained its weight around 60% to 64%, the fall towards the 50% zone was going to be started in April.
What explains this paradigm shift?
Several theories try to explain this paradigm shift at the level of the crypto industry. First, the $ 60K, a heavy technical obstacle for BTC. Indeed, for more than a month he has stumbled on the $ 60,000 mark and would be in a range between $ 52,000 to $ 60,000.
The second theory relates to the usefulness of crypto apart from the speculation aspect. When we see a crypto like Solana which is a hit on the stock market and even seems ready to compete with Ethereum.
We wonder, if we would not be at the time of cryptos with intrinsic values. Because the interest in industry goes beyond speculation. For example, the cryptos of smart contracts, NFTs, DApps, DeFi are increasingly in demand by traditional companies.
However, BTC can be thankful for having the support of institutional investors who rely heavily on the asset as a safe haven against inflation. Blackrock, Microstrategy, Tesla have already bet on Bitcoin. In addition, crypto has a strong argument: its long-term scarcity.
In fact, the computer protocol at the base of Bitcoin provides for the creation of only 21 million BTC, but we are already at more than 18 million. The rarer Bitcoin is, the more its price could rise and therefore gain momentum in the long-term market.
Altcoins: Portfolio diversification assets!
Bitcoin has for a long time stolen the limelight from other cryptos in the industry. Due to its popularity and profitability, it is therefore the number one option for anyone starting out by investing in cryptocurrencies. The reflex is not bad, but there are other cryptos that have performed significantly better than Bitcoin in recent months. On an annual basis, Bitcoin has only grown by 88%.
Annual performance of altcoins from January 1 to April 25
- Ethereum (+ 258.11%)
- Dogecoin (+ 9086%)
- XRP (+ 791.71%)
- Vechain (+ 1400%)
- Uniswap (+ 664.41%)
- Solana (+3107.28)
- Safemoon (+ 6600%)
Good to know : For the calculation, we took as a benchmark the opening price on January 1 and the largest ATH observed over the period to determine the annual performance of these altcoins.
Considering the spectacular performance of altcoins, including two or three tokens in your wallet will be a very good way to diversify it. Thus, you will be able to minimize the risks if Bitcoin enters a bullish phase. After all, you shouldn’t put all your eggs in one basket.
However, some commentators believe that diversification in the crypto market does not make sense because altcoins only faithfully keep pace with Bitcoin. They will tell you that it only takes a small drop in Bitcoin for the market to explode.
In reality, the argument of these commentators is false because some altcoins have been released without being helped by Bitcoin. The Dogecoin explosion is a case study example that altcoins can outperform without the help of BTC.