The year of 2018 has so far brought not a great deal of good fortune for cryptocurrency investors, as the market has pulled back almost 70% from all-time highs reached at the end of 2017. Still, there are some positive signs for Bitcoin enthusiasts as the biggest cryptocurrency in the industry continues to claw back market share from its competitors.
Bitcoin Regains Control
At the time of publishing Bitcoin’s market share is above 49%, the highest it has been this calendar year. This trend has flipped the script from the beginning of the year when altcoins were rocketing up in price, suppressing Bitcoin’s market dominance to its lowest level ever.
The surge in Bitcoin dominance during this bear market can be viewed in many ways. First, it seems as though investors are more quick to pull out of other cryptocurrencies as compared to Bitcoin, possibly seeing the market leader as the most stable project in the industry. Second, even though the entire market is in a tailspin, Bitcoin continues to receive positive news which is keeping investors in the game.
Reasons for the Surge
Fundstrat Global Advisors’ managing partner Tom Lee noted, “The news that we have seen, from the SEC saying bitcoin’s a commodity, to … the potential for an [exchange-traded fund] is causing investors to decide that bitcoin is the best house in a tough market. I think bitcoin dominance is actually showing the market is reacting to what’s been taking place.”
Even after the Winklevoss twins had their Bitcoin ETF squashed, there remains a backlog of other ETFs waiting in the wings for approval, most notably the VanEck SolidX Bitcoin ETF now slated for review by the SEC in September. This gives hope to building a stronger case for legitimacy in the market, along with the capital injection of institutional investment
The Dominance of Bitcoin in a Changing Market
It will be interesting to take note of the market share of Bitcoin as this bear market continues to hold steady. If the market turns for the better and alt coins once again rise from the ashes, money could flow out of Bitcoin just like during the previous run in 2017. Still, a cryptocurrency market in which prices are steadily rising and Bitcoin is losing market share doesn’t necessarily result in bad news for the industry’s largest coin, it just leaves the door open for competitors, such as Ethereum, to swoop in and take control of the market.
Dan is a freelance cryptocurrency and blockchain content writer. He has written content for startups, ICOs, financial planners, venture capital firms, and more. Previously he founded an e-commerce company that grew to $1 million in revenue and profitability in less than 3 years. Dan has a degree in Economics and Finance from Bentley University.