Cryptocurrency may very well change the way we purchase food and clothes, store money, and utilize financial services. Bitcoin was the first cryptocurrency to be developed, and since its invention in 2009 it’s been used as both an alternative to traditional fiat currency and an investment vehicle. More and more people join the cryptocurrency revolution every day, and financial technology like this is becoming increasingly mainstream.
But, if cryptocurrency is starting to appeal to the public, then why the cryptocurrency markets just experience a substantial pullback – and how does the fact that Bitcoin emerged from the market downturn virtually unscathed foreshadow for the future of blockchain currency?
Cryptocurrency Markets Slide Through 2018
Bitcoin was developed in 2009 and it’s been the leading cryptocurrency in the market pretty much ever since. As it gained investors and users over time, the coin’s market cap began to increase, and by the end of 2017 it was at about $830 billion. Soon after, however, Bitcoin and the rest of the cryptocurrency market experienced a substantial pullback.
Cryptocurrency markets ended 2017 at a record high, but it’s pretty much been bad news since then. The digital coin market experienced a downturn in the beginning of 2018, and the price of a Bitcoin went from around $20,000 in December 2017 to around $10,000 by January 2018. Of course, Bitcoin was not alone in this downfall – Ethereum (ETH) and Ripple (XRP) also lost about 40% in the first month of 2018 alone. However, unlike Bitcoin, Ethereum and Ripple have struggled to hold their value in the latter half of the year.
Bitcoin Reigns Supreme
Since Bitcoin was launched in the public domain, there have been quite a few competitive cryptocurrencies to follow it. Currently, the top two altcoins challenging Bitcoin’s market dominance are Ethereum and XRP, each of which compete for the number-two and number-three spots at a market cap of around $20 billion each, depending on the value of their respective coins. However, Bitcoin is the dominant cryptocurrency based on market cap, and its price movements have a substantial impact on cryptocurrency activity.
Investors and crypto entrepreneurs look at the price of Bitcoin as an indicator of the value of the larger overall market, and Bitcoin’s market cap dominance may be foreshadowing a long-awaited stabilization in the cryptocurrency markets. Approaching the year-end market peak in 2017, Bitcoin dominance was well over 80%.
Only after mid-December did the world’s first digital currency begin to slide in relative market cap. Throughout 2018, Bitcoin’s market cap slid to below 40 percent, but over the past several months the world-famous digital currency has been clawing its way back to become the majority share of the cryptocurrency markets once again.
Cryptocurrency has entered the mainstream, but even despite increasing demand the market for cryptocurrency is still extremely high-risk. However, as many people rushed to invest in this exciting new technology, many of them failed to realize how unpredictable the market for truly was. This year has made more and more cryptocurrency investors risk-averse, particularly given that the pullback in the cryptocurrency markets has had a large impact on small cap investors. This may result in increasing consolidation of cryptocurrency market capacity in Bitcoin, which stands out as a reliable and long-standing form of digital currency.