The days of asking how to short Bitcoin might have come to an end for the next few months and then some, as the total cryptocurrency market cap has returned to a pivotal level of $2 trillion and counting.
The level acted as a rejection point months prior, while Bitcoin was trading at much higher levels. A larger selloff set back Bitcoin and the rest of the market, and although BTC performed better all summer long, the last couple of weeks has resulted in altcoins playing catch up.
They have since not only caught up, but are now potentially even more bullish than Bitcoin is. Here is a closer look at the total cryptocurrency market cap, and this latest achievement.
The Recovery After The Recent Collapse In Crypto
Bitcoin has risen by 50% after a 50% fall, recapturing half of what the top cryptocurrency lost after it fell from its all-time high in April 2021. Meanwhile, after Bitcoin broke out from downtrend resistance, the entire crypto market began to rise in tandem.
Ethereum soared, XRP saw a sudden spike, and even Litecoin saw a strong recovery. Altcoins everywhere such as Dogecoin outperformed Bitcoin by a wide margin, which is unusual without sideways consolidation.
Bitcoin has even declined in recent days, while altcoins continued to climb, suggesting that some profit taking of BTC into altcoins might have begun. The money made during the last rally appears to have gotten bored and is moving back into markets in waves, starting with illiquid altcoins.
It takes less capital to move these markets and cause serious volatility. With crypto holders still ready to FOMO with the pull of trigger, there are still conditions prevalent for prices to increase.
Bitcoin Dominance Nosedives As Altcoins Take Over
Part of the reason for the divergence from Bitcoin, is due to the sentiment across the market still remaining negative regarding the cryptocurrency’s energy usage, and the fact that it is still quite expensive on a per coin basis.
Investors are realizing they can buy a lot more coins for less capital if they stay away from Bitcoin, which is why the likes of Dogecoin continue to thrive. Dogecoin in general has the added benefit of Elon Musk behind it, and it was recently announced that Tesla would accept DOGE as a payment for their electric vehicles.
Ethereum has its own reasons, mostly driven by a continued supply shock and the rapidly burning token supply thanks to the ETH 2.0 update and EIP-1559 upgrade. The impact of these changes could allow Ethereum to scale properly and see less bottlenecks in throughput or high fees.
$2 Trillion Crypto Market Cap Brings Back Greed And Exuberance
Ethereum competitors like Solana and Polkadot have also been on the rise. Internet Computer, and other newly listed Coinbase coins are all surging. NFT mania is also spinning out of control once again, with people buying all kinds of JPEG images, even some that represent a digital image of a rock.
Crypto investors are quick to trash precious metals as little more than shiny useless rocks, but are more than happy to fork over hundreds of thousands of dollars for a cartoon photo of a rock. Go figure.
It doesn’t have to make sense for it to work across crypto. Even meme coins are ablaze with interest all over again. Investors never seem to learn that these assets tend to result in losses once the exuberance fades and the blinders come off. Eventually when the bear market arrives, these investors could be left holding heavy bags for years to come.
Will A Flight From Growth To Value Follow?
Focusing on value in the cryptocurrency market is the best way to survive the storm ahead. The bull market might not be over, but there could be a flight from risk and growth to value assets. This latest impulse could be final profit-taking on altcoins and an exit pump into Bitcoin, Ethereum, XRP, and Litecoin before these assets move up and leave worthless meme coins behind.
Litecoin and XRP for example have yet to set a new all-time high during this cycle, and have a lot left to go now that there are so few sellers remaining. Ethereum has nearly everything going in its favor, from supply issues to incredible demand and usage.
Finally, the smartest money of all will move back into Bitcoin, now that the $2 trillion market cap has been reclaimed. If Bitcoin also takes hold over the $50,000 area, a push to a new all-time high is likely in the days and weeks ahead.
How Bitcoin And Crypto Will Disrupt Finance
Bitcoin is expected to potentially rise to as much as hundreds of thousands of dollars per coin before the cycle is all said and done. Even more unknown, however, is the prices of other speculative cryptocurrency assets like Ethereum and other altcoins. The DeFi space is new, NFTs are also raking in as much as millions. Money is flowing all over the crypto landscape and it is only a matter of time before this flows back into Bitcoin and another wave of FOMO begins.
Each new bullish impulse wave in Bitcoin brings in more and more market participants, and through network effect helps the cryptocurrency grow its reach and dominance globally. Although altcoins have been encroaching on Bitcoin’s dominance, Bitcoin and cryptocurrencies in general have been taking over the stock market, currencies, commodities, and more.
Digital gold has even disrupted the gold standard, and the world of finance won’t ever be the same. Some day, the stock market could exist in token form, running on the blockchain for transparency and accounting purposes. All of this is possible thanks to the technology created with Bitcoin, and has applications all across finance and other industries. In a blockchain based world, trust is no longer an issue.
Getting exposed to Bitcoin at this point is less risky than not holding Bitcoin, and getting involved now is still early. The crypto market moves fast, so before it does again, consider which cryptocurrencies to invest in, and which products, platforms, and services you can use to access these assets.