The biggest slump in bitcoin dominance has occurred in the last three months, when the weight of the currency in the global cryptocurrency market fell by almost 15 percent. The reason is not the agony of bitcoin, but the beginning of the era of a new generation of cryptocurrencies, as well as the willingness of investors to take more risks.
“The world of cryptocurrencies is going through another bubble associated with so-called decentralized finance (DeFi) projects. Just as it was before with the bubble with the initial cryptocurrency subscriptions, so today a large number of these new cryptocurrencies are emerging, ”says Jiří Procházka, portfolio manager at Consequ.
According to him, they grow significantly faster than bitcoin in a short time. “The end of this bubble, as well as the previous one, will culminate in a 99 percent drop in the price of these currencies and the persistence of two and three, which will actually have some, albeit minimal, use,” adds Procházka.
–
–
Among the modern bets of cryptocurrency investors is, for example, Chainlink, whose coins have risen to five times their price since May alone. At the same time, with five billion dollars, Chainlink holds the lead in the market value of decentralized finance. Decentralized finance is intended to be an extension of cryptocurrencies and, in addition to traditional payments, to bring more complex financial services such as loans, trading or even mortgages. All without an intermediary and without registration or authentication.
“People are beginning to realize that the ability to move applications to a blockchain has value, and because bitcoin doesn’t reasonably allow it, more and more capital is being moved out of bitcoin. The consequence of these processes is the declining dominance of Bitcoin in the world of cryptocurrencies, ”adds BH Securities economist Stěpán Křeček.
–
–
For the time being, the weight of bitcoin on the cryptocurrency market reached an all-time low in January 2018, when its share of the value of the entire market fell to only a third. According to experts, the importance of investors’ risk appetite, symbolized by the sharp rise in stock indices, is also undermining the importance of bitcoin. “If distrust prevails, investors turn to bitcoin. He sees it as relatively less risky, liquid, thanks to trading in derivatives on the stock exchange and more predictable, “says Jan Lamser from the Fintech company Red Eggs.
If, as in the recent past, risk betting has prevailed, investors are starting to look for new addresses. “As interest in cryptocurrencies grows in general, investors are more optimistic, more open, and more looking for growth opportunities. As a result, interest in other cryptocurrencies is relatively growing, ”adds Lamser.
–
–
However, the dominance of bitcoin in the world of cryptocurrencies has its alternative methods of calculation. According to indices that measure the dominance of bitcoin against a more narrowly defined basket of cryptocurrencies, the dominance reaches up to eighty percent. “Such a basket does not contain, for example, cryptocurrencies issued through the ICO, ie the so-called primary coin offers,” says Cyrrus economist Tomáš Pfeiler. In addition, a large proportion of cryptocurrencies are traded over-the-counter.
“Typically, owners change through the OTC market and decentralized exchanges. In addition, some are anonymous, so no information can be read from them, not even about the volume, “says Pavol Lupták, one of the founders of Parallel Polis, adding that bitcoin has a stable share of about 90 percent in the store.
– .
