Why Bitcoin’s Market Power Is Fading as Crypto Ecosystem Matures

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Why Bitcoin’s Market Power Is Fading as Crypto Ecosystem Matures

According to a recent Bloomberg article, Bitcoin, the biggest cryptocurrency by market value, is losing its influence as the driving force of the cryptocurrency industry, having fallen more than 35% from its 2019 highs as of Tuesday. According to numerous industry analysts, this is the effect of the digital currency “environment” “maturing.” According to their most recent research, rival digital currencies and new blockchain technologies are driving Bitcoin’s price movements.

Bitcoin’s ‘Coming of Age’

While some market observers have blamed Bitcoin’s rough 2019 ride on disappointments such as the International Exchange Inc.’s (ICE) new futures contracts, an accumulation of technical negative signs, and other headwinds, alternative data company Indexica has identified another downward culprit.

According to Bloomberg, Indexica CEO Zak Selbert describes Bitcoin’s sensitivity to the rise of rivals as “simply another indicator of a coming of age.” Indexica discovered that Bitcoin’s greatest predictive metric was its “quoteability,” which demonstrated that it was most often mentioned in combination with other conventional currencies.

Bitcoin’s Place in the Financial Landscape

According to Bloomberg, the new results, based on data from August 1 to October 1, reinforce the assumption that Bitcoin’s difficulties are due to a burgeoning cryptocurrency ecosystem rather than the coin itself. Indexica cited concrete examples, such as Mastercard Inc.’s (MA) announcement of a collaboration with business software supplier R3 to develop a blockchain solution for cross-border payments.

“Now that Bitcoin is a big child, anything can move it, just as anything can move gold or a G-10 currency,” Selbert said. “Bitcoin is a deeply integrated and mature element of the financial environment.”

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According to another Bloomberg analysis, although Bitcoin accounts for the bulk of the cryptocurrency world’s assets by market value, it is not the most frequently utilized cryptocurrency. Tether has the largest daily and monthly trading volume among digital assets, according to CoinMarketCap.com statistics, despite its market value being about 30 times lower.

What’s Next?

Predicting the future price of bitcoin is a difficult task for anybody. Even bulls who anticipate the cryptocurrency to recover from its downturn, with some just waiting for the new Bakkt futures market to gain momentum, should brace themselves for a rocky ride.

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