“While Bitcoin continues its impressive surge, it’s important to remember that not all cryptocurrencies are enjoying the same success, highlighting the need for diversified investments in the volatile crypto market.”
Bitcoin Price Surges Past $35,000, but Rest of Crypto Market Struggles
The price of Bitcoin briefly crossed the $35,000 mark this week, sparking excitement among investors. Some analysts believe that the growing participation of small investors could be a positive sign for the cryptocurrency in the coming weeks. However, the rise in Bitcoin’s price hasn’t had the same effect on the rest of the market.
The surge in Bitcoin’s price was driven by trading related to the potential approval of a spot Bitcoin exchange-traded fund (ETF). This news intensified trading and pushed the price above $30,000, resulting in a short squeeze. Over the past three days, more than $250 million in short positions were liquidated.
At the same time, the Bitcoin Dominance Index (BDI), which measures Bitcoin’s share of the overall crypto market, reached its highest level since April 2021. While a rising Bitcoin usually lifts all crypto assets, the rest of the market has struggled to keep up with Bitcoin’s performance.
The BDI has seen a steady increase since the collapse of crypto exchange FTX in November 2022. Currently, the BDI stands at around 54.4%, indicating Bitcoin’s dominance over other cryptocurrencies.
Interestingly, other crypto assets like Ethereum have not performed as well as Bitcoin over the past year. For example, Ethereum’s native crypto asset, ether, has only seen a 14% gain compared to Bitcoin’s approximately 66% gain.
Additionally, Bloomberg reported that crypto tokens are being delisted from exchanges at an unprecedented rate. Data from Kaiko shows that nearly 3,500 crypto token delistings have either already occurred or are expected to happen in 2023. Coinbase, which is currently facing a lawsuit from the U.S. Securities and Exchange Commission, has delisted 80 trading pairs this month alone.
Despite the struggles of the rest of the market, there is optimism surrounding small investors’ involvement in Bitcoin. Increased wallet activity and the rise in the median value of transfer volumes on the Bitcoin blockchain indicate growing small-investor participation. This is seen as a necessary condition for a sustained bull market in crypto assets.
In conclusion, while Bitcoin’s price surge is exciting for investors, the rest of the crypto market has not experienced the same level of success. Bitcoin’s dominance over the market has increased, leading to delistings of other crypto assets from exchanges. However, the involvement of small investors in Bitcoin could potentially lay the groundwork for a bull market in the cryptocurrency.