These past two weeks we've seen Bitcoin go from $6.3k to $8.3k breaking a 2-month peak in 2 weeks. What was surprising though is not the fact that bitcoin rose by $2k in two weeks but that this spike in price didn't reflect on altcoins like it used to. For as long as I can remember Bitcoin charts would be directly mirrored by at least 100 altcoins whether it was a rise or fall in price.
This time around we finally saw this trend dissipate. As a result bitcoin's market dominance increased to a 1-year+ high of 47.2% and it this trend continues we'll probably see Bitcoin own 50% of the total cryptocurrency market cap. To put things into perspective on July 14 the second biggest crypto - Ethereum had a $44 Billion market cap and Bitcoin had a $107 Billion market cap.
Doing the math, Bitcoin had slightly less than 2.5x the market of Ethereum. Today (as of writing) Ethereum sits at a market cap of $47 Billion, citing an increase of $3 Billion (15%) over the past two weeks. Bitcoin, on the other hand, sits at a market cap of $137 Billion citing a rise of $30 Billion ( 32%) in the same period of time.
What does this mean? Well, firstly it means that the Bitcoin ETF news had a great influence on the market cap as new funds poured pretty discriminately into Bitcoin and some of that trickled down to altcoins. Secondly, this means Bitcoin dependency of altcoins still exists as this independence will be short-lived just until after the Bitcoin ETF hearing.
Let's examine the possibilities likely to arise from the SEC's decision.
- The Bitcoin ETF passes:
- The Bitcoin ETF is denied:
- There's also a third outcome which is that the SEC postpones the hearing to a future date:
Then we would see an explosion in the cryptocurrency market especially for Bitcoin as new money floods into the market. I strongly believe that if the SEC gives Bitcoin the green light then billions, possibly even trillions of institutional money would invest in the space. Should the decision come back positive then we're all set for new all-time highs far surpassing those set back in December last year. $100K Bitcoin? Easily.
In this instance clearly it means bad news in the short term as prices will fall and might even dip to the lowest levels seen this year. Those who were betting on bitcoin going up in the short term will incur some extended losses before the market can recover again. The recent SEC rejection of the Winklevoss Bitcoin ETF appeal does not bode well for the upcoming one and we can see the market react as bitcoin has now dipped below $8k following the news.
Personally, I would rather we get a definite answer sooner rather than later but then again a postponement is better than a rejection, at least then there's hope. Kicking the can further down the street is something regulatory bodies often do when there's no clear conclusion yet. I think this outcome would also be good for Bitcoin's price because of what I alluded to earlier in that there's still hope and anticipation in the market.
Highly Speculative
The cryptocurrency market is still very young and immature and the volatility is just one testament to that. Even the slightest of news can have a price impact on your investment and sometimes that snowballs into a greater impact. There's a lot of speculation going on in this space and one thing you quickly learn is to ignore it and focus on decisions that impact the future (long-term).
That's the strategy, or mentality rather, I adopted otherwise I would've gone insane by now, not to mention the money I would've lost following the herd based on speculations. Decide what crypto is worth to you, where you see it in the future and don't be swayed by the short-term news. This isn't financial advice thus you should handle your own finances the way you see fit.
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