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Is Bitcoin Losing Its Position As A Crypto Market Leader?

Cryptocurrencies such as ETH or ADA have evolved far beyond BTC

Although the price of bitcoin is experiencing a new bullish rally, it surpassed USD 51K this last weekend, and according to the experts, it is on its way towards its ATH level, other cryptocurrencies seem to have been eclipsing BTC with superior performance.

The world’s largest cryptocurrency by market capitalization reached $ 51,500 this weekend, its highest since May 14, 2021, up more than 75% from the July lows when it fell below $ 30K.

However, ether, the second largest digital asset by market value, has doubled in value in recent months, and Cardano’s ADA token has increased 3-fold in the same time.

ETH hit $ 4,026.93 this weekend – trading just below $ 3,990 at the close of this note – having risen more than 130% after falling to a recent low of $ 1,711.23 on June 22. ETH accumulates a rise of more than 400% so far in 2021.

For its part, Cardano’s ADA has made spectacular gains, hitting an all-time high of $ 3.10 this weekend, up 200 % after hitting a $ 1 low in June.

Amid these latest developments, some investors might wonder if eBTC is still the market leader. Jesse Proudman, co-founder and CTO of the cryptocurrency hedge fund Strix Leviathan, expressed that “in the last few months, we have witnessed a marked change in that status and in the last week, we are seeing the beginning of a clean break in which Bitcoin is now following the movements of other currencies like Ethereum. ”

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Jeff Dorman, chief investment officer at asset manager Arca, was a little blunter:

Bitcoin no longer leads the markets.

Dorman explained that “BTC has shown both poor upside and downside capture throughout the year, which means that it does not keep pace with the rises and is outselling other assets on the dips.”

And he added that “everyone is beginning to understand that Bitcoin should not be tied to the success or failure of other assets. They are completely different.”

Different investors and specialists agree that unlike the early days of digital assets, when Bitcoin was almost the only investment option, crypto assets have evolved far beyond BTC. And new sectors stand out with much faster growth trajectories such as the Decentralized Finance space, gaming, NFTs, and web 3.0, all of which have completely different token factors and attributes that contribute to their returns.

On the other hand, Jesse Knutson, vice president of financial products at Blockstream, has a more optimistic opinion, about the most prominent digital currency in the world and stated that we are experiencing the ‘maturation’ of bitcoin: “In the last 12 months, there has been an incredible amount of institutional and even sovereign interest in the crypto ecosystem, “Knutson said.”This interest has been almost exclusively focused on Bitcoin.”

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The executive added that “Morgan Stanley and JPM are rolling out dedicated Bitcoin products for private equity clients, and countries like El Salvador are looking to Bitcoin not only as an engine for growth, but also to really solve financial infrastructure challenges. Given With 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 every now and then. ”

Other analysts offered different perspectives, talking about how they believe the broader digital assets markets will mature over time. Amber Ghaddar, co-founder of the decentralized capital market AllianceBlock, believes that although today BTC leads the market, a fork and a decrease in correlation in price is to be expected in the long term. This is that as time passes, individual digital assets are expected to derive their values ​​less from speculation and more based on their own specific characteristics.

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“Prices are made up of two components: a fundamental component and a speculative component. The speculative part is usually the most important and is driven by sentiment, anticipated future uses and scalability,” Ghaddar said.

From this stance, the fundamental component – easily calculated by looking at network data – is expected to take a larger share of the price as new layer 1 block chains begin to mature and / or go live.

Jalak Jobanputra, Founder and Managing Partner of Future Perfect Ventures, also addressed the growing divergence between bitcoin and other digital assets: “We strongly believe in a multi-crypto world and that each currency will end up being valued according to its particular use case. Bitcoin has emerged as a store of value and inflation hedge, while Ethereum has become the currency for DeFi and NFT applications, and thus, in many ways, the reserve currency of Web 3.0. I hope that Bitcoin will follow more macroeconomic trends as it is doing now. ”

Whichever position is imposed, this is an exciting transition, as we are seeing some of these are increasingly valued for their importance as tools than for the estimation or sentiment of speculators.

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