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Bitcoin surrenders market dominance

As investor interest rotates to Ethereum and riskier altcoins.
Even JP Morgan sees upside in Ethereum as institutions can now invest in the cryptocurrency via ETFs. Image: Chris Ratcliffe, Bloomberg

Bitcoin ended the month of April in the red – its first losing month since September 2020.

Not that its April performance (-2%) was a shocker, but it paled alongside altcoins, which registered an average 47% gain for the month.

In January, bitcoin accounted for 73% of the total crypto market cap. That figure has now sunk below 50%.

“Given the historical and psychological significance of the 50% (market cap) level, a decisive move below said level could mean that bitcoin underperforms in the months ahead,” says Kraken Intelligence’s market recap for April 2021.

“The rotation into altcoins can perhaps be explained by market participants consciously choosing to venture further out on the ‘crypto risk curve’ and coming to terms with ‘The Law of Large Numbers’. That is, as bitcoin gets larger and larger, it cannot sustain the same growth. Therefore, market participants may see altcoins as having a greater upside and/or a better risk-reward profile.”

Despite bitcoin remaining rangebound for the past several months, demand from institutions remains strong and bitcoin’s April low of $47 000 may have set the base for a march back up to the coin’s all-time high of $65 000.

A host of favourable indicators released in April suggest the global economy is on the rebound, though market participants remain on edge over talks of higher taxes, fears of inflation and stock prices at record levels.

Bitcoin has shown a strong positive correlation to stocks, and the possibility of a stock market correction may be weighing on its sluggish performance over the last eight weeks.

The total market cap of all cryptos is now $2.4 trillion, of which bitcoin accounts for just 44%, with Ethereum (ETH) surging to 19% from just 12% earlier in the year.

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The story of the last month has been ETH’s 140% sprint since the beginning of April, with Kraken Intelligence suggesting the next stop may be $5 200 (from the current price of $4 100). ETH has now recorded seven consecutive months of gains, with newfound institutional support – and the launch of several ETH-focused exchange traded funds in Canada – providing lift to prices. The second largest cryptocurrency by market cap has further boosted by some technological improvements that will allow for speedier adoption of the Ethereum network (and its native currency ether) as a financial and business hub.

Ethereum’s business case differs from that of bitcoin in that it is used to solve actual business and transactional problems.

Tens of thousands of Ethereum users are able to lend, borrow and earn interest using ether as collateral. Even JP Morgan sees upside in Ethereum as institutions can now invest in the cryptocurrency via ETFs. Unlike bitcoin, which will never have more than 21 million coins in issue, Ethereum in circulation has been rising by about 5% a year, but that will drop to 1-2% a year once the new network protocol (known as EIP 1559) is introduced later this year. The rate at which ETH supply is inflated each year has a direct bearing on expected future prices.

Source: Kraken Intelligence

Other factors driving the ETH price are the growth in non-fungible tokens and stablecoins, most of which rely on the Ethereum network.

JP Morgan says the rise in bond yields and the eventual normalisation of monetary policy is putting downward pressure on bitcoin as a form of digital gold, just as gold prices have been suppressed by the availability of higher yielding assets.

Two other cryptocurrencies grabbing investor attention in the last month were Cardano and Dogecoin, though for very different reasons.

Cardano is seen as a possible competitor to Ethereum, and its parent company IOHK announced a “new partnership with the Ethiopian government to implement a national, blockchain-based student and teacher ID and attainment recording system to digitally verify grades, remotely monitor school performance, and boost education and employment nationwide”.

Dogecoin ended the month of April with a jaw-dropping 500%-plus return, and now ranks among the top five cryptocurrencies in terms of market capitalisation.

Tesla CEO Elon Musk has helped punt this coin, which has benefitted from the network effects of a growing body of investors willing it to the moon and beyond.

Altcoins may have stolen the thunder over the last eight weeks, but don’t write off bitcoin just yet, says Kraken Intelligence. Its consolidation above the $45 000 level has allowed the market “to catch its breath and for BTC to build a new support to potentially lift off from in the not-so-distant future”.

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I really, really want to believe in altcoins as big governments, fiat currencies and helicopter money is simply theft via inflation. But I don’t have faith in an asset that is just ‘made’ and that suddenly has the following value: “The total market cap of all cryptos is now $2.4 trillion”. I suspect that this is the biggest bubble in the history of man. Think it was Rockefeller that exited the markets when the shoeshine boy gave him stock tips – well my 16 year old son owns tiny bits of Bitcoin and he doesn’t know the price of bread. 95% probability that these are e-tulips to me

Naaaaah, you dont really care about any of that big picture nonsense. You have known about crypto/digital assets for years but shunned it and lost out on life changing money, now you come with excuses to make yourself feel better about your inaction. Be honest with yourself.

FYI, $2.4 trillion is about the same size as Apple market cap, one single company. You dont understand value.

The classic response from someone invested in a bubble. Sounds like the Dotcom commentators all over again.

Investors – time to start seeing the peak fever for what it is – an indicator of a market top.

You sound like somebody who’d “invested” his Iscor pension in Krion.

CT Executive – I will celebrate your success if I’m wrong. I did take action – my choice of action was to avoid and yes, do nothing. Re Apple, behind it is something, LOTS of something. Behind cryptocurrencies are simply people buying who are ‘afraid to miss out’, the driver of all bubbles. I send you an e-tulip with my very best wishes!!

Well well you seem to know a bit about Bitcoin . Please tell us how you value crypto.s . Love to hear from you . One other thing , when you buy Bitcoin where does the money go ? Ie What is Bitcoin bank account details . Money always goes into wo things , cash or bank account .

Andrew
How to value Bitcoin? Go to and exchange and see what someone will pay you for it. When you buy Bitcoin where does the money go? Well not unsurprisingly to the person you bought from.

Correct, Pamplona. There is no reason that any crypto should have any value whatsoever. It is a mere chit on a blockchain. The underlying technology is not propriety and anyone can start a cryptocurrency. Crypto has no current earnings, no future earnings nor is it a claim on an underlying asset. It has no value. It will keep going up until it crashes. When, I have no idea, but it will.

Wrong. Eg $BNB has millions of users in its community(Binance), over 100+ development teams, 100+ billion dollars traded on exchange and liquidity pools A DAY, millions in transcation on its BSC chain. It goes hand in hand with fintech. You think the wall street and tech elites are going to lose…you think it’s only been broke millenials YOLOing/entering this space?

@RSA Liberty, lol, Iv been hearing that for 8 years baba, and so what??, allocate capital accordingly.

@CTExecutive – “You think Wall Street and tech elites are going to lose?”

LOL! What a laughable statement.

All the major players on Wall Street, institutions whose balance sheets were the size of middle-income countries, piled into subprime mortgages prior to 2008. They lost so disastrously, the taxpayers had to bail them out.

And, in comparison to the absolutely nothing, zilch, nada that is behind crypto-so-called-currencies, at least there was real estate behind subprime mortgages, which at least had some economic value, but still the crash was spectacular.

Shakin’ mah haid…..

@Richardthe Great…sounds like a good description of FIAT currency

The fundamentals of Bitcoin and other is to hedge against governments propensity to print currency at economic problems of their doing

Bitcoin, like gold is now viewed as “money” and its future will be that of spending power the people will own and not that of institutions

Leah Buchanan. There is a huge difference between fiat currency and crypto. All fiat is borrowed into existence. Each rand is thus owed by someone or some entity. Each rand is thus a claim on the future labour of another. If you don’t service your debts (in rand) “they” will seize your assets. What gives fiat value is unredeemable debt. Crypto has no such debt backing not any underlying asset backing. It is a mere chit on a blockchain. It can be created arbitrarily.

Just about everything in financial services is “just made”? Lening systems? Just made. Payment systems? Just made. Websites? Just made. This tulip thing doesn’t fly. Real world payment, lending, shorting etc etc financial systems are being built in the DeFI ecosystems; decentralized and immutable via the blockchain. You may take beef with the valuations of the tokens, but denying that something real, functional and valuable is being built is just living with your head in the sand.

Absolutely agree with Pamplona. The point this article is missing is that to attach any non zero value to a crypto, you are hoping that it would become a global, widely accepted, stable currency that can be used to buy and sell things more effectively than USD. With the rise of many altcoins, the probability that the coins you buy now are non zero is decreasing fast. The long term winners might be government issued cryptos not yet created, that are possibly pegged to the USD anyway, meaning there is no room to speculate in them and offer stable value. Therefore I am also in agreement, 95% plus chance every single crypto currently known is e-tulips, or what I prefer to call trading sardines (as opposed to those that can be eaten when hungry).

I think I am getting tired of sceptics sitting on the sideline just repeating popular opinion…the facts are overwhelming:

1. BTC best asset class delivering exceptional value over past 10 years. It is following a very predictable and repeatable pattern. Very foolish to ignore!
2. My investment increase in almost 1000% in just 1 year.
3. Fiat is depreciating. Some depreciated over night (i.e. Columbia, Zimbabwe, etc.). “Stable countries” like the US is also on a devaluating path. Fiat is just slowly dying…

Here’s a challenge for you: instead of finding reasons why crypto will be a huge success (which are all based on a hope and a prayer in any case), come up with a list of what will cause it to fail (which has been frequently written about). Then do a check on which of those conditions currently exist/is likely to happen. If you’re still convinced that it is worth the risk, then peace brother.

If you believe Bitcoin is a bubble then what do you believe gold is. Gold has a 11 Trillion Market cap and has very little use other than a store of wealth. Human have always needed a rare product that cant be reproduced or faked to use as a currency. Bitcoin is just a digital version of it.

PFP – you cant make gold, thus it is rare – you can make a 1000 crypto currencies, as such they can never be rare (agree on can’t be faked). I am a gold bear anyway (barbarous relic as per Keynes) but it does have a 4000+ year track record?

think of the different Cryptos as different metals or minerals on earth, they all have different uses or rarities, any one of them could have been picked but gold was picked. similar to cryptos, Bitcoin was picked and is the most successful due to its track record even though its only 10 years old. its still early days compared to 4000 years but gold started out the same way.

Im in no way saying that it should keep going up. That’s crazy but as a electronic store of wealth it could work.

Silver is your goldilocks asset then. Massively undervalued as a monetary metal (especially relative to Gold). Some say the price is suppressed (and will break higher). Over 50% of the annual amount mined is used in industrial applications. So you have a consistent ‘burn’ rate (using crypto terms). And it’s much more decentralised than Gold (central banks own most of the Gold).

Lol , old school vs new school folks

End of comments.

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