“Long-term I am not seeing the currency dying out or anything of that sort as long as there is demand, and as long as China has capital curbs which keep you from taking out money currencies like bitcoin”, opines Bloomberg reporter Robin Ganguly on Monday. “[If] there’s more widespread use in the US, then [Bitcoin] will probably be [here] for a long, long, long time”.
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Speculation Versus Long-Term Trends
The Bloomberg reporter delivered this analysis as bitcoin’s overall percentage of the digital currency market had fallen in the wake of a rejected Bitcoin ETF.
However, even as the 125th Bitcoin obituary was being penned, as recorded by a website which tracks such things, bitcoin’s price rebounded quickly after the SEC’s decision on Friday. The digital currency trades at $1,246 at the time of writing.
Google Trends suggests that Bitcoin’s popularity still far outpaces other cryptocurrencies. As seen above, more Google users query bitcoin than the next cryptocurrency by a considerable margin.
Despite the decline in its overall percentage of the total cryptocurrency market, bitcoin remains within its historical average of 80-90%. Its nadir, according to Coinmarketcap, took place approximately one year ago when bitcoin fell to below 75% of all cryptocurrency markets combined.
The total combined ‘altcoin’ market capitalization broke through to new highs after the SEC’s decision and now sits at about $5 billion overall. According to social media, traders cashed out of bitcoin when the price peaked and found safe harbor in altcoins. For instance, after the SEC’s ETF decision, demand for altcoins spiked and there were price gains across the board on popular trading platforms.
“It would be quite hard not to profit from altcoins because everything is pumping”, suggested one cryptocurrency enthusiast, hinting that speculation, not unique use cases, fed the increased demand for bitcoin alternatives.
Bitcoin’s overall percentage of the market remains within its historical range even as Ethereum, the second-largest bitcoin alternative, breaks new price records. The smart contract-based blockchain project reached an all-time high of $24 over the weekend.
Bitcoin as a Risk Management Tool
“I think investors are looking at [Bitcoin] as a risk management tool”, says Mr. Ganguly. “In China, there are suspicions that people use it to get money out of the country, capital outflows. So, I am not sure that [the SEC’s] decision, about four years in the making, will have a huge effect on people who need the digital currency for the purposes that they do”.
The SEC taking four years to investigate whether or not to approve a rule change to make way for a Bitcoin ETF might even lend legitimacy to the digital currency in the minds of some investors.
Writing for Forbes, Laura Shin noted that blockchain analysts Chris Burniske (Ark Invest) and Spencer Bogart (Blockchain Capital) liked the fact that the SEC was thorough and thoughtful in its Bitcoin ETF decision.
“They clearly put a lot of thought into investigating the bitcoin markets and took time to explain their reasoning”, Burniske said.
Bogart added: “If I’m an institutional trading desk, maybe now I can’t do the ETF, but [the SEC decision-making process] has changed my appetite to trade bitcoin as a whole”.
What do you think about bitcoin’s recent decline in the overall market share of digital currency market? Let us know in the comments below.
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