The importance of still the most popular virtual coin is also close to its historical low, with bitcoin having the lowest market share three years ago. At that time, it represented an exact third of the market.
“The expansion of the range of accepted cryptocurrencies leads to a decrease in the share of original cryptocurrencies,” explains Aleš Prandstetter, head of the securities trader eFrank.cz. During this year alone, the number of cryptocurrencies increased by about a third to less than ten thousand.
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“The steady increase in the number of cryptocurrencies in itself increases the overall market capitalization and may reduce the share of the largest currencies. The most significant drop in bitcoin dominance from more than 60 percent occurred only in the past two months.
Money within the market was also diverted by the increasingly loud demand for the ecology of cryptocurrencies. “Typically, some investor institutions have started to focus on cryptocurrencies that are less harmful to the environment. These are mainly cryptocurrencies that do not use the concept of conventional mining as we know it from bitcoin,” adds Michael Kopta, a member of XTB’s management. An example is the Cardano project or just ether, whose technological platform Ethereum awaits a shift from virtual coin mining.
While bitcoin doubled in price from the beginning of the year to the top of the cryptocurrency market in May, the entire market grew significantly faster, to about 3.5 times.
The global cryptocurrency double ether nearly quadrupled over the same period, falling by the same amount as bitcoin during the Great Fall of May. The result is a new market structure, where bitcoin and ether have the total value closest to each other since mid-2017, ie at a time when cryptocurrencies were a completely marginal investor theme.
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The weight of ether in the entire cryptotrk is around twenty percent after a large drop, the highest in the last two years. “This corresponds to the rapid growth of the world of decentralized finance, which works mainly on so-called platform blockchains such as Etherea. It is its growth and the world of decentralized finance in general that has attracted other investors in this area,” adds Kopta.
Likewise, the share of the total value of currencies such as Binance Coin or Cardano has increased six to eight times, from less than one percent to three to four percent shares of the global market.
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“If the entire crypt market suffers a significant and more permanent decline, many retail players will leave the virtual coin segment. This would increase the dominance of bitcoin again,” says Cyrrus economist Tomáš Pfeiler. According to economists, institutional investors play a more prominent role on bitcoin, and they are not subject to such moody market gusts to such an extent.
“It is also difficult for them to invest in other cryptoactive activities for a number of regulatory reasons. The stronger the ratio of institutional to retail players, the higher the dominance of bitcoin,” adds Pfeiler.
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