Bitcoin is the crypto that has always intrigued crypto traders’ interests. Several Crypto exchange platforms have been tracking it for years, and BTC takes pride in its place, topping the charts of market trends — one time after another.
This first-ever digital currency was assailed by multiple “altcoin” competitors in 2021 — from newcomers like Solana and DOT to old players like Litecoin and Dogecoin. This has increased the likelihood of the crypto market fragmenting quickly.
Yet Bitcoin has stalled its loss of market share in the new year and is set to regain ground again.
As per statistics from CoinMarketCap, which tracks more than 17,225 cryptos across 458 exchanges, Bitcoin’s share of $1.68 trillion in the market has risen to around 42%, up from 39% two weeks ago. This is the first time it has witnessed such an increase since dropping from a peak (of 46%) in mid-Oct.
Market players warn against calling a trend, noting that while bitcoin has outperformed, the entire cryptocurrency market has tumbled. Nevertheless, the 13-year-old BTC is expected to benefit from the conservative investment climate compared to its competitors.
“Bitcoin will scoop up the liquidity in the market if uncertainty persists,” said Matthew Dibb, COO of Stack Funds (A Singapore-based Crypto fund distributor).
Most cryptocurrencies take their cues from Bitcoin’s price; however, certain fund managers anticipate a gradual divergence this year, which would necessitate greater selectivity.
This suggests that 2022 will likely involve a deliberate, subtle, and effective strategy.
Bitcoin dominates the market cap as Altcoins struggle
Having suffered the way down from all-time price highs, Bitcoin’s latest move seems beneficial as, once again, BTC is set to reclaim the lost grounds against the Altcoins.
Cryptocurrencies have had a rough start earlier this year, as nervous investors refrained from the risks. Despite this, bitcoin’s 20% drop in Jan — to around $37,000 — was the smallest amongst top coins. Even its main challenger Ethereum is down 34%.
Cryptocurrencies linked to blockchains, which are used to create decentralized finance apps, have lost even more ground. Solana, which increased 100-fold in 2021, is now down by 47%, while Polkadot is down by 41%.
Previously, the focus was on digital assets, namely Ether, Solana, and others, as they specifically capitalized on BTC’s weakness. And now that the tables have turned, strength’s drifting back to BTC (which managed 40% dominance throughout the latter half of January).
Bitcoin Still Determines the Crypto Market
Bitcoin has become a symbol of the crypto world, and any issues with Bitcoin are bound to hurt other projects. Those institutional investors who have already invested in cryptocurrency have officially started with Bitcoin. Companies like Tesla and Block are also taking a bet on Bitcoin. So, If their Bitcoin holdings lead to losses, they’ll have a hard time convincing their investors that they need to diversify their portfolio into other cryptocurrencies.
While supporters of other crypto projects may assert that their projects are far better than Bitcoin and are potential enough to capture its market share, the reality is — Bitcoin’s success is critical to the success of other projects.
If Bitcoin stabilizes at current levels, other projects may face great trouble as big players will not increase their allocations to the crypto segment in this scenario. Simply put, if institutional investors are unwilling to increase their Bitcoin allocations, it may result in bearish for altcoins.
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