Bitcoin has struggled to reach its all-time high in recent months.
Getty
Bitcoin prices have been doing well lately, following a steady, upward trend over the past few weeks as they climb to the record high they set earlier this year.
The world’s largest cryptocurrency by market capitalization has reached $ 51,037.01 today, the highest since May 14, according to CoinDesk data. At this point, it had risen more than 75% since it hit a local low on June 22nd.
While this may sound impressive, other prominent digital currencies have outperformed banknotes lately with their superior performance.
Ether, the second-largest digital asset by market value, has doubled in recent months and Cardano’s ada token has tripled at the same time, according to CoinDesk price data.
Ether hit $ 4,026.93 earlier today, after rising more than 130% after falling to a recent low of $ 1,711.23 on June 22, according to additional CoinDesk data. At this recent time, ether increased by more than 400% over the year.
Cardano’s ada testimony has benefited from even more compelling gains, which rose to an all-time high of $ 3.10 yesterday, when it had risen more than 200% after reaching a local low of $ 1.00 on June 22nd.
[Ed note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment.]
In the midst of these latest developments, some investors might wonder if Bitcoin has remained the market leader for years.
“For most of its history, Bitcoin has acted as the reserve currency of the cryptographic ecosystem, directing the upward or downward direction for everything else,” said Jesse Proudman, co-founder and CEO of cryptography. of the Strix Leviathan hedge fund.
“Over the last few months, we have witnessed a marked change in this state and, over the last week, we are seeing the beginning of a net break in which Bitcoin follows movements of other currencies like Ethereum,” he stated.
Jeff Dorman, investment manager at asset manager Arca, said things a little more bluntly.
“Bitcoin no longer leads the markets,” he stated. “It has presented both low catches and low catches throughout the year, which means it doesn’t keep pace with concentrations and sells more than other assets in recessions.”
“More importantly, everyone (except individuals and companies who rely solely on the success of Bitcoin) is beginning to understand that Bitcoin should not be tied to the success or failures of other assets. They are completely different. ”
“Unlike the early days of digital assets where Bitcoin was the only game in the city, this class of assets has evolved far beyond cryptocurrencies,” he noted.
“There are new sectors that have much faster growth trajectories, such as DeFi (decentralized financing), games, sports, NFTs and web 3.0, all with completely different symbolic factors and attributes that contribute to their performance.”
Bitcoin “maturation”
Blockstream vice president of financial products Jesse Knutson offered a more optimistic view, given how the world’s largest digital currency continues to develop.
“I think what we’re seeing here is the maturation of Bitcoin,” he stated.
“Over the last twelve months, there has been an incredible amount of institutional and even sovereign interest in the space,” Knutson said. “This interest has focused almost exclusively on Bitcoin.”
“The world’s largest asset managers, companies like Capital, Fidelity, Blackrock and Tudor are trying to build exposure to Bitcoin, but they are still largely limited to proxies and listed derivatives,” he noted.
“Morgan Stanley and JPM are implementing Bitcoin products dedicated to wealthy private clients and countries like El Salvador are looking for Bitcoin not only as an engine of growth, but also to solve the challenges of financial infrastructure.”
“Given the massive shift in market participants this year, I think it makes sense to see some price divergence between Bitcoin and more speculative digital assets from time to time,” Knutson said.
“The macro fund is extremely supportive of Bitcoin’s investment thesis and there is a wave of money creation that I think will likely struggle to fit into what is still a relatively small asset class by institutional and sovereign standards.” .
Continuous evolution of the market
Other analysts offered different perspectives, talking about how they believe the broader digital asset markets will mature over time.
“Many see the cryptocurrency asset class as a Bitcoin-driven monolith,” said Amber Ghaddar, co-founder of the decentralized capital market AllianceBlock.
“Our thesis has always been that even if Bitcoin is the poster for cryptography, we need to expect a decrease in the correlation in the long run.”
As time goes on, expect individual digital assets to derive their values less from speculation and more based on their own specific characteristics.
“Prices are made up of two components: a fundamental component and a speculative component. The speculative part is usually the biggest and is driven by sentiment, expected future uses and scalability, ”Ghaddar said.
“We expect the core component, which is easily calculated by looking at network data, to have a larger proportion of the price as new Layer 1 blockchains begin to mature and / or be released.”
Jalak Jobanputra, founder and managing partner of Future Perfect Ventures, also spoke about the growing divergence between bitcoin and other digital assets.
“We firmly believe in a multi-cryptographic world and that each currency will be valued according to its particular use case,” he stated.
“Bitcoin has emerged as a storehouse of value and inflation coverage, while Ethereum has become the currency of DeFi and NFT applications and therefore, in many terms, the reserve currency for Web 3.0. I hope Bitcoin will follow more macroeconomic trends, as it does right now. ”
“This is an exciting transition, as we are seeing some of these more innovative cryptocurrencies become their own beyond being used as tools for speculators.”
Disclosure: I have some bitcoins, bitcoin cash, litecoin, ether and EOS.