A lot of time is spent paying attention to the price of Bitcoin and its overall swings. This is for two key reasons. First, almost all other cryptocurrencies have their price move in high correlation to Bitcoin’s price. So any changes in the BTC/USD rate represents a proportionate change in the price of those other tokens.
Similarly, Bitcoin dominance is a good measure of the overall split of forward-looking sentiments within the industry. Bitcoin dominance has recently taken a tumble down to ~51%, which means altcoins are starting to represent a larger portion of the overall market capitalization of the industry.
One thing that we should all remember about Bitcoin is how much money was previously invested in it, but was withdrawn out of the industry in 2018. You had all the fairweather investors who had bought Bitcoin at the behest of their friends liquidating it. So it is fair to say it naturally moves more dramatically than altcoins because of its function as a gateway to the industry.
Bitcoin vs. Altcoins
The schism between investing in Bitcoin opposed to investing in altcoins is quite large. Polls generally show that Bitcoin maximalists are a significant portion of the investing space. These are the “hardcore believers” who have made extremely high predictions for the future price of Bitcoin. Altcoins are an afterthought to them and some even consider the other few thousand coins to be scams more than anything.
The arguments for only investing in Bitcoin are that it was the first cryptocurrency and has the highest mainstream adoption. It is essentially synonymous with “crypto” to the layman, and most regulations are centered around it so far.
For newbies to the crypto world, it isn’t always obvious what the most profitable investments are going to be. To be clear, no one can truly know what will do well, but the experts at least have an understanding of the different macroeconomic factors that affect groups of coins and can model out how changes in the economy will affect the industry.
Altcoins can be split into more well-known ones like Ethereum, Litecoin, Ripple, and more, or there are coins with much smaller market capitalizations. The argument for investing in altcoins is there is significantly more upside available, and that Bitcoin’s upside has already been realized to a large extent.
More Believers Backing Up Bitcoin
Recent news has seen well-known Bitcoin skeptic Niall Ferguson changing his view and showing support for the cryptocurrency. In the past, he viewed it as a delusional investment with no intrinsic value, but after the massive market correction and some reevaluation, he now sees that Bitcoin and blockchain technology have a future in the world.
He’d previously been told to invest in Bitcoin by his teenaged son, but considered it a foolish investment and avoided it. This resulted in him missing out on a potential 45x return. The interesting trend here is that the bust has actually drawn in more proponents than it has lost. You could argue that many of the previous Bitcoin evangelists were opportunists more than believers. Now, the true believers are becoming clear, and these include Jack Dorsey, Elon Musk, and now Niall Ferguson in their ranks.