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Bitcoin’s Surge Leaves Smaller Digital Currencies In The Dust (#GotBitcoin?)

Other cryptocurrencies have largely been left behind in this year’s surge. Bitcoin’s Surge Leaves Smaller Digital Currencies In The Dust (#GotBitcoin?)

This year’s cryptocurrency rally has so far been all about bitcoin.

Bitcoin has more than tripled since January, rising as high as nearly $14,000 on Wednesday before falling back to around $12,000, according to research site CoinDesk. In recent days, its rapid moves and large swings resembled its wild ride in late 2017.

The world’s most popular cryptocurrency is now about 40% below its all-time high of nearly $20,000 reached in December 2017, after losing more than four-fifths of its value during last year’s crash.

One key difference between this year’s climb and the last big bitcoin rally is what has happened to other cryptocurrencies. In 2017, bitcoin’s manic rally had a multiplier effect: investors also piled into many smaller digital currencies hoping to catch the next hot bet.

Rival cryptocurrencies haven’t had as much success this time.

Digital coins like Ethereum, Ripple Inc.’s backed XRP coin and Bitcoin Cash are still trading between 70% and 90% below their record highs, according to data provider CoinMarketCap, which tracks more than 2,000 different cryptocurrencies.

The gulf between some currencies has widened of late. Over a recent seven-day period, bitcoin rallied 36%, Ethereum gained 21%, XRP rose 5% and Litecoin fell 7%.

The result is that bitcoin now makes up 62% of the cryptocurrency market’s total value, compared with a third of the market near the height of the last rally, according to CoinMarketCap. To be sure, the market is also significantly smaller now, at around $325 billion versus its peak of more than $800 billion.

“This has really been a bitcoin story over the past few months,” said Arthur Hayes, co-founder and chief executive at BitMEX, a cryptocurrency derivatives trading platform. If bitcoin keeps rallying, he said investors could turn back to some smaller digital coins in hopes of finding bargains.

Adrian Lai, managing director at BlackHorse Group, a cryptocurrency investment company in Hong Kong, said his firm bought about 200 bitcoins in mid-June when the price was around $8,800. He said bitcoin looks attractive because it has name recognition and he thinks large investors are more likely to gravitate to it.

More institutional support for cryptocurrencies and Facebook Inc.’s unveiling of its own Libra cryptocurrency have been among the biggest drivers of bitcoin’s latest rally.

“There was definitely a view in 2017 that while bitcoin was obviously the market leader, new technology and innovation would disrupt it,” said Richard Byworth, chief executive at Diginex, a blockchain financial services and technology company. “But now it just feels like bitcoin is winning so much faster than anything else.”

Henri Arslanian, crypto leader at PwC, said there is an element of FOMO, an acronym standing for “fear of missing out,” that has been driving the latest rally. He said he has been getting emails from individual and institutional investors wanting to learn more about cryptocurrencies.

“For a lot of people entering the crypto space, bitcoin is often the entry point,” Mr. Arslanian said.

There is reason for caution about bitcoin’s next move. Some hedge funds and other big traders are betting that bitcoin will fall in the short term, as evidenced by recent positions in CME Group ’s bitcoin futures contracts.

But others say Facebook’s new cryptocurrency and its vast potential are reasons enough to stay optimistic.

“I think Libra is going to lead to mass adoption of crypto,” said Michael Conn, a managing partner at Quail Creek Ventures in Los Angeles, which invests in digital assets. The way to play that, he said, is to accumulate more bitcoin. He said he bought more in recent days when the price was around $11,500. Bitcoin’s Surge Leaves Smaller, Bitcoin’s Surge Leaves Smaller

 

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