Bitcoin Is Back, Back, Back, Baby
The premier crypto is regaining dominance of investment dollars, mindshare, and “narrative,” says Ben Schiller.
Bitcoin Dominates the Market
Bitcoin is currently dominating the narratives, media coverage, and mindshare among investors, especially institutional investors. While other cryptocurrencies like Solana (SOL) and Chainlink (LINK) are rising in value, it's clear that this is a bitcoin-led market. Bitcoin's dominance, which measures its market cap compared to other cryptocurrencies, is around 50%. This contradicts previous claims that bitcoin would become less relevant as the crypto market expanded. In fact, in November 2022, bitcoin's market share dropped below 35%.
The influx of Wall Street money into exchange-traded funds (ETFs) has played a significant role in bitcoin's dominance. The anticipation of ETFs throughout 2023, along with SEC Chair Gary Gensler's delay in approving them, has benefited bitcoin. Bitcoin's clear classification as a non-security digital asset has given it an advantage over other cryptocurrencies that face regulatory uncertainty.
The Upcoming Halving and Bitcoin's Evolution
In April, the rewards for mining bitcoin blocks are set to be halved, an event known as the "halving." Halvings have historically boosted bitcoin's price, and many believe that this year's halving could have an even greater impact due to the Bitcoin network's increasing usefulness and wider adoption. Recent developments suggest that bitcoin is evolving beyond its role as digital gold and becoming something more significant.
One example of this evolution is the on-chain activity enabled by Ordinal inscriptions and BRC-20 tokens. These advancements allow users to embed data and art on the Bitcoin blockchain, expanding its use-cases. This on-chain activity has generated substantial fees for miners, mitigating some of the challenges they will face when mining rewards are halved in April.
However, this evolution has also created divisions within the Bitcoin community. Some advocate for maintaining Bitcoin as a digital gold network for cheap monetary transactions, while others want to build new functionality on top of the blockchain. The role of Wall Street power players in this debate will be interesting to observe.
Bitcoin's Continued Success
Despite the ongoing debates and divisions, Bitcoin is thriving. It is an open-source blockchain with millions of users, from individual HODLers to major financial institutions. Bitcoin-based derivatives are actively traded, and it has come a long way since its humble beginnings as a hobby project 15 years ago.
CoinDesk, the leading news and information platform for cryptocurrency and digital assets, continues to provide top-quality coverage of this evolving space. In November 2023, CoinDesk was acquired by Bullish group, enhancing its resources and expertise. CoinDesk operates as an independent subsidiary and maintains strict editorial policies to ensure journalistic integrity.
Ben Schiller, CoinDesk's managing editor for features and opinion, offers valuable insights into the world of crypto. His experience in the industry and understanding of its complexities make him a trusted source for analysis and opinion. Follow him on Twitter (@btschiller) for more updates.
