By David Drake
Even though Bitcoin was launched in 2009, it became very popular in 2017. High speculation saw its price rise throughout the year to a high of almost $20,000, up from $1000 at the beginning of the year. Despite its speedy growth in value, this leading cryptocurrency has had its fair share of high volatility characterised by frequent price swings. However, it is the sharp dip in prices that Bitcoin and other cryptocurrencies experienced early this year that clearly shows how volatile the cryptocurrency market can be.
Many ideas have been put forward to explain the volatility of Bitcoin including the introduction of regulations in countries such as South Korea, and the ban of Bitcoin trading in countries like China. But there is a possibility that other factors are at play as noted by Tom Marchesello, Advisor to IvyKoin.
He says, “Bitcoin is falling because people now have better choices in 2018. The other coins that are not bitcoin have gained new investor support. Better technology and leadership is attracting majority of new upside growth in 2018. Bitcoin has lost its market leadership already in 2017. Just measure the percentage dominance of bitcoin vs other coins. Bitcoin once had 80% plus of the market and today it is less than 34% and will fall below 25%. This is great news for everyone in the world that knows cryptocurrencies are innovative new tools in our financial markets. Other coins are just better than Bitcoin. Now people can see that more clearly and are moving to other platforms.”
Bitcoin has a way of bouncing back from price dips that cause its value to drop. After going through a period of turmoil, Bitcoin is slowly recovering. At the time of this writing, the cryptocurrency is trading at $11,150 after hitting its lowest price of less than $6000 last month. Despite its volatility, Bitcoin appears to maintain its lucrativeness as an investment asset.
BubbleTone founder and CEO, Yury Morozov, says, “Bitcoin’s investment capacity is consistent and has been bolstered by adoption in many forms by some of the largest mainstream financial market players. The incredible part is that we are witnessing this new type of asset in the making. This causes Bitcoin to be extraordinarily exposed to the crowd’s psychology. It is also increasingly influenced by news and media, which generates huge waves of impulses and corrections.”
But not every player in the cryptocurrency industry feels that Bitcoin will sustain its appeal to investors. According to Marchesello, the value of Bitcoin is likely to reduce as investors opt for other cryptocurrencies.
“Bitcoin’s value will fall because money is leaving Bitcoin in favor of other coins. We will all finally be free of the Bitcoin hostage situation from the past where it was the one coin domination of all the conversations. Once we drop the bitcoin related FUD, we will all be free from the pressure of a single currency index behavior. Traders will actually have to read a white paper from another platform like Ether or Nem or Dash and learn how Blockchain works,” Marchesello says.
At the beginning of 2017, Bitcoin’s market share in the cryptocurrency market stood at more than 80%. Today, it controls less than 40% of the market, a clear indication that it is fast losing its grip of the cryptocurrency market. Considering Bitcoin’s finite supply, it will be interesting to see how this leading cryptocurrency will survive growing competition.
Disclaimer: David Drake is on the advisory board for most of the firms mentioned or quoted in this article.