Bitcoin Soars Above $1950 (Despite Losing Crypto Dominance)

Tyler Durden's picture

Despite Bitcoin dropping below 50% of total cryptocurrency market cap for the first time, the dominant virtual currency has continued to soar this week, breaking above $1950 this morning (as the dollar drifts lower).

Bitcoin is now up 110% against the dollar in 2017...

 

And this comes as Bitcoin loses its dominance. As the first of its kind to emerge, bitcoin has become synonymous with “cryptocurrency”. But lately it’s been joined by a lot of others – which together now account for more than half of the cryptocurrency ecosystem:

For First Time, Bitcoin Accounts for Less Than Half Of Market Cap Of All Cryptocurrencies

(Forbes) – For the first time, Bitcoin’s market capitalization as a percentage of all cryptocurrencies has dropped to below 50%.

 

It is a symbolic turning point for the first cryptocurrency, which for a long time accounted for more than 90% of the value of all blockchain-based assets combined, particularly through a period when so-called alt-coins that were only minor tweaks to bitcoin proliferated.

 

Its market capitalization then comprised over 80% of all cryptocurrencies for years, a range that held true until two months ago when it dipped below 80% and not only did not recover but did a quick dive straight down.

 

 

 

Several factors are driving the drop from its status as the clear leader.

 

1. Bitcoin’s development is stalled.

A more than two-year-long saga has left progress on its network stymied. With the various factions unable to compromise and no clear method for moving beyond the impasse, the network has been stuck staring down the same question of how to expand the network to accommodate more transactions that it first faced in early 2015. Meanwhile, as no decisions get made, transaction fees have risen from about 11 cents a year ago to $1.70 now, and the time to confirm a transaction has nearly doubled to almost 20 minutes. Because the community has been unable to resolve its divisions, some of the technological advances people were excited to see on bitcoin will be adopted on other tokens, such as Litecoin, which could emerge as the payment token, while bitcoin evolves more into a digital gold, because its software will only ever release 21 million units.

 

2. Ethereum continues to grow.

Ethereum has, for a while, been the cryptocurrency with the second-largest market cap, but in recent months, its greater rise has further has eroded bitcoin’s dominance. While throughout 2016, its share of the market cap of all cryptocurrencies was in the single digits, it has, in the last couple months, inched closer to 20% as its price has risen from $8 in early January toward $100 in recent days.

 

3. New ICOs add value to the crypto space every day.

Third, a wave of new cryptocurrency launches in crowdsales called initial coin offerings has so far raised $380 million for new networks that have functions beyond just currency. For instance, a few new storage coins aim to facilitate payments between computers needing more storage space and computers with excess drive space to offer in networks like Filecoin, Sia and Storj. Meanwhile, Golem Network Tokens are used for payments between computers that need extra computing power to, say, train a machine-learning algorithm, and computers that have spare GPU and CPU cycles to offer while its owner sleeps. So many new tokens with uses different from bitcoin’s are bound enlarge the pie, but still narrow its dominance.

 

4. Speculation is driving up the value of all tokens.

Because the ICOs are proving to be such an easy way to crowd fund, they are also being used just as that — as an easy way to raise money — for projects for which tokens don’t even particularly make sense, as well as scams. Speculation is also running rampant as investors who don’t understand the technology or what makes a token valuable snatch up both promising as well as poorly conceived tokens. One project that raised eyebrows recently was a crowdsale of Gnosis tokens, which, because of the way the ICO was designed, left Gnosis, which is only in beta and doesn’t yet have a product to offer consumers, with a valuation of $300 million right after its ICO. Now, speculative trading has now multiplied its valuation to $1.2 billion.

 

5. Ripple is seeing a big spike.

While the other trends have been driving bitcoin’s share of all cryptocurrency market caps down broadly, what appears to have finally tipped bitcoin below the 50% mark is the 24% surge of XRP, the token of the Ripple network, in the last 24 hours. Since Chinese regulators began enforcing basic know-your-customer, anti-money-laundering procedures earlier this year, Japan has overtaken China as the country with the highest crypto trading volume. XRP is popular in Japan, and one writer surmises it is because of the work Ripple does in Japan, such as through its joint venture, SBI Ripple Asia, with SBI Holdings.

 

7. Tezos is about to launch.

Okay, so this last one might not have pushed bitcoin below the 50% threshold, but it is likely to help keep it below that threshold. Tezos may be one of the most anticipated ICOs, about to launch in June and stay open for two weeks. The code is written in OCaml, a language that has the ability to formally verify smart contracts to ensure that they execute as the creators intended them to. Tezos is also generating excitement because the software has, built into it, a mechanism for resolving issues such as the scaling debate in bitcoin. Therefore, even if bitcoin exceeds 50% market share for now, it will likely again fall under that threshold once the Tezos ICO begins.

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zanza's picture

Get your coins while you can.  Bitcoin Core development team is pretty bad though, they are trying to cripple Bitcoin with articifial small blocksize limit.

abyssinian's picture

Forget about bitcoin, ethereum is the future of all business. It will trade above bitcoin in few months

FrozenGoodz's picture

What's the hold up with implementing the ATM's in US? 

 

Have to drive 8 hours to acquire a damn coin

meta-trader's picture

you can add an extra 1500/USD week after week in your income just working on the internet for a couple of hours each day... check this link... http://bit.ly/2jdTzrM

gold-is-not-dead's picture

the bottom this time is around $300-$500, I have my orders set. Waiting impatiently for this bubble to BURST!!! This will be my third time in BTC to catch 'em cheap.

gold-is-not-dead's picture

at these price levels it is better to store PMs than to gamble with bitcoin.

dasein211's picture

Oh my god. Just speculate with a small amount and buy a new car when you cash out!!! I'm in for Tezos. Might make a grip of cash there!!

gold-is-not-dead's picture

I have mined 466 bitcoins, I have no interest in gambling small. I already bought a bimmer back in 2013, during previous bubble.

dark fiber's picture

Nah it too is a goner.  Mycoin on the other hand will trade above all other *coins and then some, and will trade 50% above Yourcoin although Hiscoin may be a better performer in the long run.  Do you see the problem with this *coin business? 

Silver Savior's picture

Yep I figured as much. I like what I read about Ethereum. I can see it easily going past bitcoin because it is so much more useful. This is going to be epic.

quadraspleen's picture

I bought some ETH this morning. It's gone up £10 a unit since then.

 

Seems legit. LOL

Creepy_Azz_Crackaah's picture

"Forget about bitcoin, ethereum is the future of all business."

Puuuuhlease!!! My SuperMegaBlasterCoin will dominate the world in short order. Just send me $100/coin and I'll SFTP you your coin numbers. Minimum order 100 coins. Hurry and get in before you miss out on the YUUUUGE(!!!!) profits.

Bunga Bunga's picture

Bitcoin gets crippled by blocking SegWit, which would enable Lightning Network (massive scaling), confidential transactions and other features. Chinas communist government wants to prevent this and they have their miners at gunpoint, that's why they are blocking it.

Other team also demonstrated that it can deliver very low quality code only (their sosftware crashed multiple times bringing their nodes to a halt).

williambanzai7's picture

I have a bitcoin...now WTF do I do?

freedogger's picture

PVC tubes buried deeper than three feet work pretty well. Err wait, wrong thread.

GlassHouse101's picture

buy silver with it here: jmbullion.com

dasein211's picture

Bitcoin>gold and silver. Gotta love it!!

GlassHouse101's picture

People made a lot of money buying/selling tulips, too     

tmosley's picture

Be sure it is in a secure wallet first. Then you can decide if you want to spread some of that purchasing power out among other fast rising cryptos. I have bitcoin, Ripple, Ether, and Dash. Shit could very easily blow up, in either a good or a bad way. No reason not to put 1% in the sector in case it is in the good way.

NoWayJose's picture

That's the point! No actual business wants to accept BitCoin or value anything in BitCoin because it has been driven by speculators on huge swings. Thus the ones that do accept BitCoin price their product in a 'real' currency, then check the BitCoin price to set their price. Once sold, they immediately dump the BitCoin and go back into their real currency. So to a business this is just a fluky means of electronic purchasing. And usage has slowed? No surprise with $1.70 per transaction!

tmosley's picture

This only happens when their vendors don't also take bitcoin.

But yes, high priced transactions will eventually kill BTC if they don't do something about it, might shift my remaining BTC for that reason.

CJgipper's picture

Or bitcoin becomes essentially gold (which it was somewhat unintentionally designed for due to network limits and deflationary nature), and ether is used as everyday trading media (which it was designed for in light of the emerging issues with bitcoin).

Txpl9421's picture

Put it under glass.  Look at it.  Go back to work.  It might be your retirement.  It might be a 2017 version of a rubic's cube.

Alfred's picture

What happens to bit coins when the lights go out?

 

His name was Seth Rich

CJgipper's picture

You use them  pay your power bill?

 

If the power is permanently destroyed, the only thing that will be relevant is food, source, water source, and munitions to protect the above from dindus.

sirsmokum's picture

Lead, steel, brass and copper will be the rule of the day then.

PumpherDumper's picture

You HODL it, of course.  Geez.

cynical_skeptic's picture

Move it to an offline, paper wallet for safe keeping until you're ready to do something with it.  Bitstamp and i'm sure many others by now let you exchange btc for physical gold.

Silver Savior's picture

Use half the coin to buy silver bars. Rinse and repeat.

thisandthat's picture

Polish it (not too hard - it's a soft wear coin, after all, I've heard).

GlassHouse101's picture

Sell your bitcoin folks . . Lawmakers are already talking about the 'illegality' and the 'money laundering' nature of Bitcoin. Buy silver with your bitcoin, and get out.

tmosley's picture

Yeah, like when drugs crashed in price when they outlawed them.

brushhog's picture

What happens when they prohibit gold and silver ownership?

0hedgehog's picture

What happens to bitcoin when the power goes out? That would be a bad thing but a grid down scenario would really be a bad thing. If you don't hold it, you don't own it!

CJgipper's picture

It sits there until the power line is rrpaired.

 

In the apocalypse you guys like to imagine, all that matters is food aource, water source, and munitions.  Ooooooooh gold.  Shiny.  Bang.  All your gold belong to me.  But who cares about when you're just hungry? 

 

"But the value in gold is after things stabilize".  Okay.   And what's the first order of business?  Fixing the water and power system?   Hey look, bitcoin is back.

GlassHouse101's picture

Do you realy think the government will allow a monetary system that is outside their control? A system they don't have a hand in it's pocket? wake up, man.         

tmosley's picture

The government doesn't get a say.

GlassHouse101's picture

You are kidding yourself. 

tmosley's picture

What do you think they are going to do? Shut down the internet?

The most they can do is a futile effort at shutting down exchanges and outlawing ownership like they tried in Russia. It didn't work then, and it won't work now.

Increasing technical sophistication among we the people will eventually make governments completely obsolete. And that is without the extreme disruption likely to be caused by the emergence of AGI, something I estimate will happen by the end of 2018 (though I think it will be developed this year, it will just take some time to get into the wild).

BlueGreen's picture

just a hypothetical; but suppose you can't buy important services (water, electricity, ...), your food, or pay your taxes with it because it is not supported by TPTB.  Your trapped using their new 'cashless' system that they control anyways-which might even be bitcoin for all you know- since it is very opaque in origin.

2rigged2fail's picture

.Gov has been smart about it.  They know they can't shut it down due to de-centralization.  So they now have coinbase reporting the buys and sells.  They assumed these things are going up like crazy so lets get the capital gains tax on these.  90% in gold / silver at 10% in BTC ETH which have gone up 60% in my account in 2 months.  

 

Why fight it for now they are not totally maniuplated like Gold / silver, would you rather have $$ that lose its worth daily.  BTC needs to be minded power, and technology behind it not just paper and ink.    

cheech_wizard's picture

I can just picture you post apocalypse.

Standard Disclaimer: Bitcoin will be back any day now, just as soon as we rebuild civilization.

 

tmosley's picture

There won't be any apocalypse.

BlueGreen's picture

your trusting that TPTB have some enlightened self interest and won't react emotionally to some event.  There's a reason there is such a saying as 'shit happens'