- Bitcoin makes up close to three-quarters of crypto market cap
- Largest asset gains 14% this week while Ether, alt coins drop
In another wild week for digital assets, Bitcoin extended its dominance, grabbing a greater share of the cryptocurrency market as most alternative coins declined.
Bitcoin now makes up close to three-quarters of the entire crypto universe, according to data from Coinmarketcap.com. Its market capitalization is above $211 billion, 10 times that of the next-largest digital asset, Ether. And in a week when traditional financial markets were roiled, its price has held up, too: Bitcoin rose 14% over the seven days through Friday, while prices for alternative assets including Ether and XRP dropped.
“As much as Bitcoin was a risky asset class, I think alt coins are significantly riskier,” said Yoni Assia, co-founder and chief executive officer of online trading platform EToro, in an interview at Bloomberg’s New York headquarters. “A lot of people got burned or had a bad experience during crypto winter,” he said, referring to a period toward the end of 2018 when digital assets sold off precipitously. Investors who held alternative coins saw their values drop by 90% sometimes, he added.
As the trade war between the U.S. and China intensified this week, with tit-for-tat retaliations rocking markets the world over, investors sought shelter in safer assets, including sovereign bonds and gold. But analysts and investors alike posited that Bitcoin also benefited from the turbulence given the sudden spike in geopolitical tensions and the coin’s isolation from government control.
Haven Paradox
“Are people buying Bitcoin because it’s a speculative asset class and borrowing is now cheaper? Or: There’s a lot of global uncertainty and this caught a lot of traders and asset managers off guard so they’re flocking to an uncorrelated asset right now?” asked David Martin, chief investment officer at Blockforce Capital. “You can make an argument for both right now.”
But many are warning: there are perils to jumping into Bitcoin as a safe haven. Cryptocurrencies are notoriously volatile, at times posting tremendous losses in a matter of minutes. In June, for instance, Bitcoin frenzy pushed its price to nearly $14,000 only to quickly reverse course to around $10,000.
Such price swings are reminiscent of 2018, when crypto assets suffered a prolonged spell that saw Bitcoin lose more than 70%. And it was earlier this year that its price languished around $3,600.
“Saying Bitcoin is a safe haven is a bit of a paradox because it’s a very high-risk asset class,” said EToro’s Assia. “It’s an alternative store of value, not necessarily a safe haven.”
Author: Vildana Hajric
Read more at: https://www.bloomberg.com/news/articles/2019-08-10/in-wild-crypto-week-bitcoin-gains-and-grabs-bigger-market-share
