Why Is Bitcoin’s Market Share Growing?

Once upon a time Bitcoin was the only cryptocurrency. Then other tokens were introduced to the point where today there are more than 10,000. Nevertheless, Bitcoin has retained its dominant position with its market share over the last few years. It varies between two-thirds and a third of all crypto market capitalization. Recently Bitcoin’s portion of crypto market value has been on the way up. Why is Bitcoin’s market share growing, along with Ethereum and Tether, while pretty much everyone else is seeing their portion of the crypto pool of value shrink?

A Storm of Regulation Threatens Crypto Exchanges and Various Tokens

We recently asked in an article if regulators will kill crypto. Our take on the subject is that regulation will be good for crypto in the long run but there will be casualties along the way. Much of this depends on how regulators view individual tokens. The Securities and Exchange Commission sees Bitcoin as a commodity and outside of its jurisdiction. It sees many altcoins as securities. This decision may have a large and harmful effect on the largest US crypto exchange, Coinbase, and on cryptocurrencies like SOL, ADA, MATIC, FIL, SAND, AXS, CHZ, FLOW, ICP, NEAR, VGX, DASH, and NEXO. Coinbase could conceivably go out of business and many altcoin could end up with no crypto exchange to trade on.

The Crypto World Hedges Its Bets

We wrote last month about how a crypto early bird bailed out. Some long-term holders of Bitcoin see the best days behind crypto and are looking for the next great investment. Others are simply hedging their investment risks because they cannot be certain how the storm of regulations will affect the vast majority of small crypto tokens. Thus, we see that the market shares of Bitcoin, Ether, and Tether are going up while crypto investors flee lesser tokens. Bitcoin trading has been rather flat since its post-Christmas surge so its market cap has not really gone up. The shift in market share has more to do with people bailing out of altcoins which are falling in individual values and a move toward caution in crypto.

Where Is Bitcoin’s Price Headed?

Bitcoin is beating the rest of the crypto herd in terms of its portion of the crypto pool of value. Meanwhile, Bitcoin itself may be in trouble. Traders are looking closely at Bitcoin’s 200-day moving average as a guide to whether it is likely to climb back above $30,000 or fall down to $20,000 or to where it sat at the end of 2022. While Bitcoin dodged a bullet by not being considered a security by the SEC, it is still the face of crypto for most people.

The generalized loss of faith and even crypto grief that came with crypto winter has not gone away yet. We are seeing the results in less of a taste for risk in Bitcoin and even more so in the altcoin world. Recent inflation numbers indicate that the Federal Reserve is probably close to done raising interest rates. That may result in a rare “soft landing” for the economy with little or no recession and minimal changes in employment numbers. If that happens the stock market, and especially the Nasdaq, will likely go up. Since Bitcoin has tended to track with the Nasdaq, we might expect to see its market cap, as well as its portion of the crypto market, rise significantly.

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