The main digital coin continues to update local highs above $ 51 thousand. What is the reason for such dynamics and why the asset may lose leadership in its market share
On Monday, September 6, the bitcoin rate updated its maximum since May 13 at around $ 51.99 thousand. As of 13:30 Moscow time, the first cryptocurrency is trading at $ 51.7 thousand, over the past day it has risen in price by 3%. The market capitalization of the asset is approaching $ 1 trillion and amounts to $ 972 billion.
The cost of bitcoin began to grow rapidly after it updated the local minimum at $ 29 thousand on July 20. Since then, the cryptocurrency has risen in price by almost 80%. There are several reasons for this dynamic.
The rise in popularity of altcoins
One of the reasons for the latest wave of Bitcoin strengthening is the growing interest of users in altcoins, according to analytical agency Santiment. One of the coins that has surpassed Bitcoin in terms of profitability in recent months is Ethereum. On Saturday, September 4, its price at the moment exceeded $ 4 thousand, setting a three-month high at this mark. As of September 6, Ethereum is trading at $ 3.9K per coin.
Whales don't bet on bitcoin decline
Now the large holders of bitcoin, who are called whales, do not open a large number of short positions on the Bitfinex crypto exchange, analysts at CryptoQuant note. According to them, the whales were actively playing on the fall in the price of the cryptocurrency at the time of its growth from $ 33 thousand to $ 40 thousand. Perhaps the large players expected that the asset would face strong resistance at the level of $ 40 thousand. once it fell to $ 29 thousand, investors began to close short positions, not counting on a further decline in prices.
Expectation of further stimulation of the US economy
On September 3, the latest data on unemployment in the United States was published, which fell by only 0.2 percentage points (from 5.4% to 5.2%). It is assumed that unemployment is not falling fast enough, and the Fed will have to pursue a policy of quantitative easing (QE) longer and not raise the key rate. This supports quotes for risky assets, including the cryptocurrency market.
Why Bitcoin may continue to rise in price?
The upward trend in cryptocurrencies may continue until the Fed announces a rate hike, says Artem Deev, head of the analytical department at AMarkets. He believes that due to the weak recovery of the American economy, the Fed may extend the stimulus measures and not cut the asset repurchase program next year.
"By the end of the year, bitcoin and altcoins are able to add another 25-50% of the value," Deev predicted.
Bitcoin growth is facilitated by news about the imminent network update (Taproot hard fork is scheduled for November this year) and the absence of strong negative from regulators, added the head of the data analysis department of CEX.IO Broker Yuri Mazur. According to him, the current cryptocurrency quotes reflect the persistence of bullish sentiments in the market and the desire of participants to return the bitcoin price to values of about $ 60 thousand, and then update the historical maximum.
What about altcoins?
On September 6, the share of bitcoin on the crypto market dropped below 40%, although at the beginning of this year it reached 70%. Altcoins are actively winning back positions in the industry, outperforming the first cryptocurrency in terms of profitability. If the price of bitcoin over the past week has grown by 6%, then Ethereum has risen in price by 22%, XRP – by 21%, Solana – by 54%, Polkadot – by 34%.
The decline in the share of bitcoin is a natural phenomenon, most likely, this trend will continue further, Deev said. He predicted a reduction in the share of the first cryptocurrency to 35-37% by the end of the year, that is, twice in a year.
Mazur added that if Bitcoin fails to compete with the ecosystems of Ethereum, Cardano and others, it is unlikely that digital gold will be able to maintain its leadership in the market. The expert suggested that the weight of bitcoin in the industry will continue to decline over the horizon of a year or two years.
“If no structural changes are made, bitcoin will lose its role as the main digital asset, remaining the first cryptocurrency only in the memory of the crypto community,” the analyst concluded.