Bitcoin soars: the alternatives don't benefit this time
So far, smaller cryptocurrencies almost always followed Bitcoin's price fluctuations. Lately, however, things changed and Bitcoin now pulls away.
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While Bitcoin continues to cost over 100,000 US dollars and has recently broken records time and again, the situation is very different for other cryptocurrencies. This year alone, the smaller cryptocurrencies – the so-called altcoins – have lost a total of USD 300 billion in market value, according to Bloomberg. This means that the performance of the most important cryptocurrency and its numerous smaller alternatives have become noticeably decoupled. According to the study, Bitcoin's share of all crypto assets has risen by nine percentage points to 64% since the beginning of the year, the highest level since January 2021.
Many Bitcoin alternatives facing the end?
The analysis makes it clear that the situation with cryptocurrencies is not as rosy as the development of Bitcoin suggests. Until now, it has usually been the case that alternative cryptocurrencies such as Ethereum also increased in value when the price of Bitcoin rose – and vice versa. However, with a price of around 2,400 US dollars, the second most important cryptocurrency is currently well below its high of 4,000 US dollars almost a year ago. According to Bloomberg, there has long been an expectation in the industry itself that many of the alternatives will now “die”, even if they will not disappear due to the underlying blockchain technology.
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The funds that have existed for the cryptocurrency for a year and a half are therefore also responsible for the soaring price of Bitcoin, from which the alternatives are not benefiting this time. A lot of capital is flowing into Bitcoin via these funds, while Ethereum & Co. are going away empty-handed. In addition to Bitcoin, which has also recently benefited from statements and measures taken by the US president, the so-called stablecoins have also been decoupled from the negative development of Bitcoin alternatives. Because they are pegged to the value of national currencies such as the US dollar, they are not subject to the same price fluctuations and therefore appear to be more stable in value.
(mho)
