The new year has brought mixed tidings for investors in bitcoin and cryptocurrency markets.
Since the start of 2018, the price of a single bitcoin has risen by approximately 12%. At 13:57 UTC, bitcoin’s price was $15,060.57, up 2.17% from 24 hours ago. The increase arrests a slide in the cryptocurrency’s price during the end of 2017. Even as it has made gains, however, its overall market share has declined to 36 percent from 56 percent last month. Its futures contracts, which debuted above $20,000, have since crashed by almost $5,000 in price.
But bitcoin’s poor performance has not affected the overall market capitalization for cryptocurrencies. They passed the $700 billion mark at 02:00 UTC and were valued at $711.6 billion at 14:20 UTC. (See also: Bitcoin Price Steadies As Crypto Markets Hit All-Time Highs.)
Altcoins have usurped most of the gains in cryptocurrency markets. For example, bitcoin’s price increase paled in comparison to that of Stellar, a cryptocurrency for banking transfers that announced partnerships with IBM Corp. (IBM) and Deloitte, whose price skyrocketed by 55% in a single day. At 14:11 UTC, Stellar was trading for a price of $0.88 per coin. In the last two days, its price has popped by 166.6%.
Cardano, a four-month-old cryptocurrency, was the other big winner, rising by 36.31%. According to reports, Cardano's blockchain will be used to verify diplomas handed out by a Greek University.
Litecoin, which is aimed at daily transaction markets, and IOTA, a cryptocurrency for the so-called Internet of Things economy, were the only losers, declining by 3.4% and 3.2% respectively. (See also: A Closer Look At IOTA.)
Is The Glass Half-Full Or Half-Empty?
That may very well be the question that bitcoin investors are asking themselves after news of bitcoin’s declining market share in the crypto market. The question is, actually, a fairly nuanced one. Bitcoin is not the only cryptocurrency with a declining market share.
The top 10 most-traded cryptocurrencies have lost approximately 26% of their share of the total market cap for cryptocurrencies since the beginning of 2017. (See more: Winners Among The Top 10 Most Traded Cryptocurrencies.) But those losses have occurred amid spectacular gains for the currencies themselves and the market as a whole.
For example, the overall market capitalization for cryptocurrencies has shot up by 4,057% during this period. Bitcoin’s declining status portends a maturity in cryptocurrency markets and is a sign of things to come. Lex Sokolin, global director of fintech strategy at Autonomous Research LLP, says that each coin’s usage “should become increasingly relevant as the novelty of crypto wears off.”
For those still worried about bitcoin’s decline, the news that libertarian par excellence and slayer of gossip publications extraordinaire, Peter Thiel, has “amassed hundreds of millions of dollars” of holdings in the cryptocurrency should come as a booster. (See also: Peter Thiel's Founders Fund Is Long On Bitcoin.)
Analysts at Nomura have predicted a 0.3% boost in Japan’s GDP based on wealth gains from bitcoin. And Dennis Gartman, a well-known commodities trader, has predicted that the cryptocurrency's price will crash to $5,000. Bitcoin's price is correlated to media coverage. Even negative coverage has helped boost its price in the past.
Investing in cryptocurrencies and other Initial Coin Offerings (“ICOs”) is highly risky and speculative, and this article is not a recommendation by Investopedia or the writer to invest in cryptocurrencies or other ICOs. Since each individual's situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. As of the date this article was written, the author owns 0.001 bitcoin.