New Delhi: Bitcoin, the largest cryptocurrency in terms of marketcap, has been facing a tough time. Despite entering teenage, the oldest digital has not seen any celebrations, thanks to steep corrections.
The crypto behemoth seems to be losing its grip in the entire crypto market capitalisation as its dominance slipped below 40 per cent, which was in the range of 45-50 per cent during its golden days.
Bitcoin scaled a lifetime peak of $68,790 on November 20, 2021, and had corrected about 40 per cent since then to hit a low of $42,761 on Thursday, January 6.
However, it is not only Bitcoin that is in pain as all the major crypto tokens were trading lower on Thursday following the hawkish view from US Federal Reserve, which hinted at a possible interest rate hike in March, sooner than expected.
But despite the weakness in broader space and all major altcoins, Bitcoin has been a leading laggard with greater underperformance in recent times.
Bitcoin has declined more than 8 per cent in the last week, underperforming its peers like Ethereum, Cardano and Ripple. Adding to the woes, only three among the top-10 altcoins have fared worse than Bitcoin, with a steeper fall.
More pain in Bitcoin?
Experts believe that Bitcoin will consolidate in the range of $40,000-$50,000 and if $40,000 levels are breached, then it may fall further.
Hitesh Malviya, founder,
itsblockchain.com said that Bitcoin is currently facing a downtrend, and witnessing the formation of a major bear cycle on a higher time frame.
“Bitcoin needs to hold $40,000 as support to avoid any further breakdown towards $30,000 or lower,” he added. However, Bitcoin will have to correct over 20 per cent from the current levels for this to happen.
During the correction in market and panic periods, traders tend to sell altcoins which are more volatile and take refuge in either stablecoins or behemoths like Bitcoin or Ethereum. However, merely this fact does not solve Bitcoin’s dilemma.
Ethereum to take over Bitcoin?
Commenting on the weakness of Bitcoin, Raj A Kappor, Founder India BlockChain Alliance said, “In my opinion, Ethereum will be the next Bitcoin.”
The key edge for Ethereum is its real-world utility. Its blockchain supports smart contracts that can be used in a wide range of applications, he added. Improvement in Ethereum’s network could be a catalyst to attract more funds.
Ethereum is not as widely known as Bitcoin and has delivered superb returns in the last one year, despite all the criticism over its speed and cost. It is less than 50 per cent away from pushing Bitcoin dominance to second spot.
“If current trajectories continue, Ethereum may very well overtake Bitcoin as the most valuable cryptocurrency sometime in 2022. Investors keep your eyes open,” Kapoor added.
Analysts refer to the battle for crypto’s top crown as the ‘Flippening’. The rise in ether’s market capitalisation suggests investors are looking for potential opportunities for return beyond Bitcoin.
However, Malviya has a word of caution for Ethereum fanatics as he believes that Ethereum can follow the lead of bitcoin. “Overall the market is not looking so good, traders should avoid getting into unnecessary positions”, he added.