Bitcoin, the “peoples” currency, is expected to regain its market dominance in the cryptocurrency markets by the end of 2019. In terms of market capitalization, that is.
That’s according to a recently published A.T. Kearney report. “By the end of 2019, Bitcoin will reclaim nearly two-thirds of the crypto-market capitalization as altcoins lose their luster because of growing risk aversion among cryptocurrency investors,’ says the report. “More broadly financial regulators will soften their stance towards the sector.”
Then there is the growing complexity of altcoins. “Our prediction that Bitcoin will regain its dominance is supported by the ever-growing complexity among altcoins, most recently demonstrated by the “hash war” that occurred in the Bitcoin Cash ecosystem,” explains Courtney Rickert McCaffrey manager of thought leadership in A.T. Kearney s Global Business Policy Council. “Additional “hard forks” and the continued lack of consensus among developers about a path forward will further widen the chasm between Bitcoin as the most accessible and widely recognized cryptocurrency and the altcoin community.”
That doesn’t mean that all altcoins will go away. “Some survive and grow up to be explosive enterprises, that have real products and generate real and substantial revenues. altcoin will follow somewhat that same pattern,” Steve Russo, Executive VP Eclypses. “Those that are whimsical and have no real value will vaporize, while the real ones will not only survive, but thrive over time. “
Bitcoin had a bad year in 2018. The digital currency lost 73% of its value, dragging down the entire cryptocurrency market.
There are several reasons for that. Like the proliferation of altcoins, which expanded the “horizontal” supply of cryptocurrencies.
Then there’s the lack of transparency in Initial Coin Offerings (ICOs). It has turned the cryptocurrency markets into a modern day “wild west,” scaring investors away.
And there are the persistently low adoption rates. In spite of the buzz generated in social media, Bitcoin adoption has been growing slowly, as evidenced by a recent Gallup survey.
This means that Bitcoin remains an exotic currency for the “innovators” and the “early adaptors,” yet to reach the “mass majority.” That’s when a new product crosses the “tipping point,” according to marketers.
But there’s one more reason behind the decline in Bitcoin’s value in 2018 -- rising interest rates. They cooled-off speculation across all markets.
Still, things can turn around for 2019. A softer regulatory stance could pave the way for the long-awaited launching of Bitcoin Exchange Traded Funds (ETFs) and could allow a broader investor participation and give a boost to the digital currency.
That’s “ironic,” according to the A.T. Kearney report. “Ironically, for cryptocurrencies to see a third decade, the only viable path forward involves this acceptance by the international financial system that Bitcoin once sought to defeat.”
Meanwhile, a pause in interest rate hikes could bring back investors to the Bitcoin market.
That’s what Bitcoin bulls need after a dismal 2018.
[Ed. note: Investing in cryptocoins or tokens is highly speculative and the market is largely unregulated. Anyone considering it should be prepared to lose their entire investment. Disclosure: I don't own any Bitcoin.]
