Is Bitcoin Losing Its Leading Position in the Crypto Market?

Bitcoin prices have been on the rise recently, continuing a steady upward trend for several weeks as they approach the all-time high established earlier this year.

According to CoinDesk data, the world’s largest cryptocurrency by market capitalization reached $51,037.01 today, its highest level since May 14. It has climbed more than 75% since hitting a local low on June 22 at this time.

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While this may appear to be amazing, several notable digital currencies have recently outperformed bitcoin in terms of performance.

According to CoinDesk price data, Ether, the second-largest digital currency by market value, has more than doubled in recent months, while Cardano’s ada token has tripled.

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Ether hit $4,026.93 earlier today, having risen more than 130 percent since hitting a low of $1,711.23 on June 22, according to CoinDesk data. Ether was up more than 400% year-to-date at its recent peak.
Cardano’s ada coin has been enjoying even more impressive increases, reaching an all-time high of $3.10 yesterday, after climbing more than 200 percent from a local low of $1.00 on June 22.

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[Editor’s note: Investing in cryptocoins or tokens is extremely risky, and the market is mainly unregulated.] Anyone thinking about it should be aware that they could lose their entire investment.]

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Some market analysts may be wondering if bitcoin is still the market leader it has been for years in light of these recent developments.

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“We’ve seen a notable change in that status over the last few months, and we’re seeing the beginning of a clean break where Bitcoin is now following the moves of other currencies like Ethereum,” he said.

Arca Asset Management’s chief investment officer, Jeff Dorman, expressed it a little more succinctly.

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He remarked, “Bitcoin no longer leads markets.” “Throughout the year, it has shown both weak upcapture and poor downcapture, implying that it does not keep up with rallies and sells off more than other assets in downturns.”

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“More importantly, everyone (save those individuals and businesses who rely only on Bitcoin’s success) is starting to realize that Bitcoin’s success or failure should not be linked to the success or failure of other assets. They are diametrically opposed.”

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“Unlike in the early days of digital assets, when Bitcoin was the only game in town,” he explained, “this asset class has developed far beyond cryptocurrencies.”

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“There are new industries with far faster growth trajectories, such as DeFi (decentralized finance), gaming, sports, NFTs, and web 3.0, all of which have completely different characteristics and token features that contribute to their returns,” says the author.

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The ‘Maturation’ of Bitcoin

Jesse Knutson, Blockstream’s VP of financial products, presented a more upbeat assessment of how the world’s most popular digital currency is progressing.

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“I believe we are witnessing the maturing of Bitcoin,” he said.

“There has been an extraordinary amount of institutional and even sovereign interest in the space over the last 12 months,” Knutson added. “This interest has been almost entirely concentrated on Bitcoin.”

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“The world’s major asset managers, such as Capital, Fidelity, Blackrock, and Tudor, are attempting to expand their Bitcoin exposure, but they are currently primarily limited to listed proxies and derivative products,” he said.

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“Dedicated Bitcoin products are being rolled out to private wealth clients by Morgan Stanley and JPMorgan Chase, and countries like El Salvador are looking to Bitcoin not only as a growth driver but also to tackle financial infrastructure challenges.”

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“Given the tremendous change in market participants this year,” Knutson said, “I think it is sense to see some price difference between Bitcoin and more speculative digital assets from time to time.”

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“The macro background is incredibly favorable of the Bitcoin investment thesis, and there is a flood of money coming in that I believe will struggle to fit into what is still a small asset class by institutional and sovereign standards.”

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Market Changes Will Continue

Other analysts shared their thoughts on how they believe the larger digital asset markets would evolve over time.

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Amber Ghaddar, cofounder of decentralized capital marketplace AllianceBlock, stated, “The crypto asset class is perceived by many as a monolith powered by Bitcoin.”

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“Even though Bitcoin is the poster child of crypto, bifurcation and a decline in correlation are to be predicted in the long run,” says the author.

Individual digital assets will, she believes, derive their prices less from speculation and more from their own unique traits as time goes forward.

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“Prices are made up of two parts: one that is fundamental and the other that is speculative. The speculative portion is frequently the greatest, driven by sentiment, future predicted uses, and scalability, according to Ghaddar.

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“As new layer 1 blockchains mature and/or become live, we expect the basic component – easily determined by looking at network data – to assume a higher amount of price.”

Future Perfect Ventures’ founder and managing partner, Jalak Jobanputra, also addressed the growing divide between bitcoin and other digital assets.

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“We have always believed in a multi-crypto future, and that each currency will eventually be valued based on its own use case,” said the company.

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“Bitcoin has established itself as a store of value and inflation hedge, whereas Ethereum has established itself as the currency for DeFi and NFT applications, and hence the reserve currency for Web 3.0 in many aspects. I believe Bitcoin will continue to follow macroeconomic trends as it does now.”

“We are seeing some of these more blue-chip cryptos emerge into their own beyond being utilized as speculative tools, which is an interesting transition.”

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