If you’re involved in the crypto market, you’ve noticed that Bitcoin continues to break any resistance and is now fighting the $ 7,000 threshold. Last month, when it was around $ 5,000 that was a 30% increase. It is not bad at all.
But lately, the other crypto altcoins had a downward trend. This means that Bitcoin domination has increased. Market capitalization is growing, but only because of Bitcoin.
How much will Bitcoin grow and how do I play this trend?
Many of those involved in the cripto market have both Bitcoin and altcoins (all the other crypto). Even if some people hate Bitcoin and they think it will be dethroned, it’s still needed in order to trade the other cryptos. Those who have Bitcoin in a smaller percentage could not enjoy too much of the market’s recent growth. Growing by the day, for me it’s clear that it’s just a matter of time until we see the maximum historical level shattered. Maybe even in 60-90 days, like in the end of 2018.
Or maybe it will do it in a longer time. No one can know that, but the wise thing is to be well positioned so you can win no matter what the time frame is.
Now, many people say that unlike the increase in 2017, when most traders were individuals, this time the trend will be catapulted to higher heights by financial institutions: hedge funds, investment funds, even certain pension funds. Institutions need to be much more cautious and more concerned about regulations.
But for Bitcoin, there are more ways to buy and that is an advantage. For the other crypts, infrastructure is still in development to be able to be traded without problems by institutions.
Okay. Now, does that mean that Bitcoin will once again reach nearly 100% dominance, as before the beginning of 2017? I doubt.
There are many extremely valuable projects in the crypto market, each with its own cases of use. Bitcoin covers only a small part of them. For example, Bitcoin is seen as the ideal currency for storing value (something similar to gold) and less like a currency that will be used to pay for daily expenses.
Ethereum and other competing cryptocurrencies are platforms on which any decentralized applications (DAPs) can be developed.
I am convinced that at some point Bitcoin domination will fall to today’s level. But I do not know when and how. Maybe tomorrow, maybe it will get you around 30%, or below. It’s risky to bet everything on a scenario. There is no magic recipe. The solution I propose is diversification. Depending on your situation, you can opt for:
1. Small diversification: BTC and Ethereum (must be in the portfolio of any investor in the crypto market)
2. Big diversification: BTC, Ethereum and other legitimate and useful projects that you analyze thoroughly.