In just a few days, the dominance of Bitcoin over the cryptocurrency market shrank to 38.2%, despite price recovery.
For years, it was taken for granted that Bitcoin’s dominance over the price of other assets was unshakable. But then, the ascent of altcoins drove Bitcoin’s dominance to around 50%, where it stayed for months, in a nice balance. But after Bitcoin was the leading news for months, a new crop of promising altcoin projects shook down the balance.
Bitcoin’s market cap dominance shrank to 38.2%, as Bitcoin recovered a bit at the beginning of the new year, to just below $14,000. Immediately, several digital assets saw very active pumps. The up and coming projects, Ripple, IOTA, Cardano and several others were inching up again.
The narrative in 2017, especially during the shrinkage of altcoin prices between September and December, was that Bitcoin would suck up any earnings from altcoins. But in 2018, it is possible that some digital assets may see direct inflows of funding, as was the case with MonaCoin, which attracted direct investment from Japanese buyers.
For some investors, the point of buying altcoins is to end up with more Bitcoins. But as Bitcoin is facing transaction hurdles and a new crop of technologies is rising, digital assets may start to de-couple themselves from Bitcoin.
What is notable is that a lot of weight is given to the “Other” category of altcoins. In terms of market cap, smaller projects easily reached levels of $1 billion, which were unthinkable a few months ago, when even Litecoin had a market cap of around $3 billion.
But there is some irrational exuberance when it comes to altcoins, as John McAfee noticed:
I recommended Verge when it was less than a penny – saying it might rise 100% to two pennies. The price has been wrongly pumped beyond reason by referencing fake Twitter accounts and Instagrams which I have never had and then I am diss’d when I point out the fraud. Please stop.
— John McAfee (@officialmcafee) December 30, 2017
In 2018, it may turn out the year would belong to obscure altcoins and projects that have better solutions to the older technical problems of the blockchain. As users and buyers are gaining understanding, altcoins may gather stronger communities, also willing to hold the asset in the long term and see the project develop.
At the beginning of 2018, the cryptocurrency market starts with a total market capitalization of $612 billion, and one trillion is projected as a doable goal for 2018. But the battle between coins will be even more strenuous as altcoins and projects verge away from Bitcoin to make their own success or failure.