The bitcoin price has slightly recovered to above $13,500 as the market valuation of Ripple dropped by $20 billion overnight.
Major Shift in Trend
Since December 30, Ripple has regained $7 billion in market cap and is still demonstrating a valuation significantly larger than Ethereum, the third most valuable cryptocurrency in the market.
Over the past few days, the entire cryptocurrency market has experienced a drastic shift in trend. Newly introduced cryptocurrencies like Cardano have demonstrated rapid growth. Cardano in particular surpassed Litecoin in terms of market valuation, achieving a $18 billion market cap.
The dominance index of bitcoin has also declined to an all-time low at 38.3 percent, as alternative cryptocurrencies in the market started to surge in value. While it is difficult to justify the market valuation of most of the cryptocurrencies in the market, it has become worrisome that the combined market valuation of alternative cryptocurrencies surpassed that of bitcoin.
In January of 2017, the dominance index of bitcoin was at over 90 percent and the majority of the funds in the market were stored in bitcoin. 12 months later, as the market enters 2018, the dominance index of bitcoin remains below 39 percent.
Several analysts are still optimistic in bitcoin achieving a trillion dollar market cap by the end of 2018, given its network effect and the adoption by financial institutions. Bitcoin still remains as the only cryptocurrency with full support from major financial institutions building options trading, exchange-traded funds (ETFs) and custodian platforms for retail traders.
As CCN previously reported in November, billionaire hedge fund legend Mike Novogratz stated:
“Bitcoin could be at $40,000 at the end of 2018. It easily could. Ethereum, which I think just touched $500 or is getting close, could be triple where it is as well. There’s a big wave of money coming, not just here but all around the world. What’s different about these coins than other commodities … there is no supply response here. So it’s a speculator’s dream in that as buying happens there’s no new supply response that comes up.”
The bitcoin community, market, and users are also expecting lower transaction fees in 2018, with the implementation of innovative scaling solutions. Developers remain confident that with the activation of Lightning, bitcoin fees can decline below $1. But, that is under the assumption that SegWit is adopted by leading bitcoin service providers like Coinbase and Blockchain. The two companies, which operate the majority of bitcoin wallets, have not integrated SegWit yet, although they plan to do so by the first quarter of 2018.
What Will Happen to Bitcoin?
Many analysts expect 2018 to be a breakout year for bitcoin, after an impressive yearly performance in 2017, with a 14-fold return. While the market valuation of many cryptocurrencies remain very high, without results, active user bases, and activities, they will not be able to retain the current valuations.
Like $10,000 was a psychological threshold for many bitcoin traders, the $1 trillion mark will be a significant milestone for bitcoin that could push its price up significantly higher than the current levels.