{"id":217635,"date":"2018-01-03T14:47:01","date_gmt":"2018-01-03T12:47:01","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=217635"},"modified":"2018-01-03T14:47:01","modified_gmt":"2018-01-03T12:47:01","slug":"bitcoin-loses-some-dazzle-as-these-other-crypto-coins-catch-up","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/banking\/217635\/bitcoin-loses-some-dazzle-as-these-other-crypto-coins-catch-up\/","title":{"rendered":"Bitcoin loses some dazzle as these other crypto coins catch up"},"content":{"rendered":"
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Bitcoin alternatives are closing the gap with the market leader after names like stellar and cardano became red hot as 2017 was closing.<\/p>\n

The biggest cryptocurrency\u2019s share of market value has fallen to about 37% from 56% a month ago, according to CoinMarketCap prices for coins and tokens. Stellar, designed for cross-border payments, has more than doubled in the first trading days of this year, achieving a record market cap of more than $13 billion.<\/p>\n

That kind of move raises questions as to whether speculators will drive up second-tier digital coins at the expense of bitcoin, even though they have different purposes. The paper value of all cryptocurrencies combined has more than doubled to almost $700 billion in the past month.<\/p>\n

\u201cThe altcoins today, in large part, are not trying to be bitcoin competitors,\u201d said Lex Sokolin, global director of fintech strategy at Autonomous Research LLP in London.<\/p>\n

\u201cThey are doing something else entirely – ethereum as a smart-contracts platform, iota as a machine-economy token, ripple for interbank payments, and so on.\u201d How each is used \u201cshould become increasingly relevant as the novelty of crypto wears off.\u201d<\/p>\n

Relative performance is now a multibillion-dollar question as professional investors search for ways to value digital assets that seem to defy traditional techniques, such as profit and dividend potential for equities, or industrial-demand outlooks for commodities.<\/p>\n

Correlation, for example, is one of many technical-analysis tools used across asset classes in forecasting, and altcoins historically have moved mostly in step with bitcoin.<\/p>\n

While there were many periods of disparity, on balance the group rose or fell together, a Bloomberg survey of more than 5,000 data points show from CoinMarketCap and CoinCap prices.<\/p>\n

With bitcoin rivals now making bigger gains, it matters more whether the group continues moving mostly in sync – as they largely have done ever since the early days when enthusiasts were mostly computer programmers and libertarians.<\/p>\n

While naysayers insist the crypto market has many signs of a bubble, speculating has been promising for many who bought second-tier coins. Ethereum, the second-largest by market value, has roughly tripled in the last two months.\u00a0Cardano is up more than 40-fold in the period.<\/p>\n

That compares with an approximate doubling for bitcoin, which went more mainstream in December by sporting its first US futures contracts.<\/p>\n

The technical shortcomings of bitcoin signal its benchmark status may be taken away someday by a second-generation rival, according to Mike McGlone, a commodity strategist at Bloomberg Industries who likens the market to internet-based companies a few decades ago.<\/p>\n

\u201cWhen the frenzy subsides, 2Gs should continue to gain on bitcoin, which has flaws and where futures can be shorted,\u201d McGlone wrote in a note last week. \u201cEthereum appears prime to assume benchmark status, though bitcoin forks ripple and litecoin are the primary up-and-coming contenders.\u201d<\/p>\n

With a $216 billion market value on Dec. 31, bitcoin was often the first stop – and maybe the last – for investors who then maybe dabbled in smaller, more volatile tokens. A surge in investor interest typically benefits the smallest more, simply because they have smaller market values, said Spencer Bogart, a partner at Blockchain Capital LLC in San Francisco.<\/p>\n

\u201cThis goes both directions though: often when crypto markets are falling you see a rotation out of the long-tail of crypto assets and into bitcoin, the \u2018king of crypto,\u2019 which is rightfully perceived to have the most staying power in the ecosystem,\u201d Bogart said.<\/p>\n

Crypto Party<\/h3>\n

As the crypto party grew bigger, the crashers – blue-suited investors and hedge funds – have purchased mostly bitcoin, and they have different buying criteria than early converts who may have moved on to less-liquid units like dash or monero, according to industry observers. The diluted investor base may weaken the yoke to bitcoin, the biggest by market value, they say.<\/p>\n

\u201cThe capital base of these markets is evolving rapidly,\u201d said Kyle Samani, managing partner of Multicoin Capital, a digital-asset hedge fund in Texas. \u201cBefore the recent bitcoin bull run, the investor base in crypto was mostly engineers, nerds, and libertarians. \u201d<\/p>\n

In the US, Samani of Multicoin Capital says he sees a division between what\u2019s on offer at the popular Coinbase exchange, and everything else.<\/p>\n

\u201cMost retail investors are only buying assets available on Coinbase,\u201d he said. \u201cWe should continue to see a decoupling between what\u2019s on Coinbase versus other altcoins.\u201d<\/p>\n

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Read: Bitcoin starts 2018 by tumbling<\/a><\/strong><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

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