Why Altcoins have struggled with Bitcoin?

By Selena 12/27/19 10:10 AM

As 2016 nears the end, the prices of significant Altcoins like Ether and XRP have skyrocketed. By the end of 2016 to early 2018, Bitcoin’s relative market share in total cryptocurrency market capitalization had dropped to about a third. Since then, the market has had a reversal. Not only did Bitcoin return after 50% of the market share, but it has also effectively doubled the value of cryptocurrencies in the past two years.

What’s gone on in the world of Altcoins and Bitcoin?

Why has there been such a reversal in recent years? Of course, this question is not something we can answer with a single data point or chart. But, several reasons are too clear to explain what happened.

We will start with the data review. Then came up with three ideas related to changes in the market – which pushed Altcoins down and BTC extremely fast.

Bitcoin market share changes year by year

Source: CoinMarketCap

You still remember the price of BTC was pushed to a high of about $20,000 at the end of 2017 and dropped to the $7,200 area today. The chart above not only shows that BTC has a period of value recovery but also shows that the value ratio of cryptocurrencies traded in the past two years has doubled.

Here are the important data points:

December 15, 2016, Bitcoin market share of total cryptocurrency market capitalization: About 86%.
December 15, 2017, Bitcoin market share of total cryptocurrency market capitalization: About 55%.
January 15, 2018, Bitcoin market share of total cryptocurrency market capitalization: About 33%.
December 15, 2018, Bitcoin market share of total cryptocurrency market capitalization: About 55%.
December 15, 2019, Bitcoin market share of total cryptocurrency market capitalization: About 66%.

Bitcoin’s market share remained stable over 80% for a very long time. Then, in early 2017, as the market share began to decline, BTC continued to slide into the early days of 2018. Since then, Bitcoin has recovered first to December 2017. And this year, the relative The value of Bitcoin has risen again, bringing it to twice its lowest ratings. And there are some reasons why BTC flourished.

The failure of decentralized applications in terms of usage and spending

It seems that the most likely Altcoin to topple Bitcoin today is still Ethereum (considering the market capitalization on the CoinMarketCap chart). Therefore, we will only discuss Ethereum on this topic.

Ethereum has long been known as a smart contract development network and decentralized applications. Since before Tron and EOS emerged as direct competitors with Ethereum, the network has always maintained its leading position in the dApp market. The amount of money spent on this platform is extremely large and at one time, people still dream about the day of the Flippening.

Flipping means overtaking the value of Bitcoin in the world of cryptocurrencies | Source: Steemit

The Flippening is that the Altcoins become less dependent on BTC. As a result, Bitcoin has gradually become weaker in the market. If such an event occurs, Ethereum will quickly surpass BTC in terms of market capitalization and popularity.

In terms of market capitalization, Ethereum is still far from Bitcoin. However, the two areas where Ethereum is ahead of BTC are the share of money distributed to miners and the number of nodes. More specifically, there was a period when 24 hours of mining with Ethereum was nearly double that of Bitcoin. Because Ethereum rewards miners more handsomely than BTC. Ironically, however, a Bitcoin is worth six times more than an ETH. But when Ethereum switches to Proof-of-Stake, these numbers will change again. Ethereum used to have more nodes than Bitcoin, namely, the number of Ethereum nodes is four times that of Bitcoin.

As Ethereum Nodes Kept Falling Over The Course Of 2019, Bitcoin Nodes Continued To Grow

And then everything stopped ever since.

When competitors emerged, Ethereum no longer ran after them, let alone on par with Bitcoin. However, dApp applications do not really bring much value. DApps often have vulnerabilities that lead to many unwanted hacks. In September 2019, a hacker stole more than 30,000 EOS (about $110,000) by exploiting the vulnerability of the EOSPlay gambling dApps of this Blockchain project.

The obsolescence of ICOs

Back in the past, 2017 was an ICO boom with more than 875 projects implemented, earning more than $6 billion through this method. Google has shown us how popular ICOs are when peaking at the same time Bitcoin prices reach an all-time high.

Source: Google Trends

By 2018, ICOs started cooling off to make room for a new trend from exchanges called IEO. In the middle of 2018 to 2019, exchanges like Binance and OKEx made an IEO call for projects to help startup companies promote.

The time of the ICO boom was also the time when Altcoin projects appeared. ETH also benefits greatly because most projects call for capital through ETH. And when the ICO cooled, the IEO emerged (which IEO you know, the trend was only for a while), many people suddenly realized they were speculating on Altcoins more than investing in a mainstream project. So when the trend is over, Bitcoin is the only thing that stays.

Scams in the cryptocurrency market

There are so many scams appearing in the cryptocurrency market that AZCoin News has mentioned. Such as Cloud Token, Plus Token, WoToken, Exxa, etc. In particular, these projects often aim to overthrow Bitcoin or replace Bitcoin in the cryptocurrency market. For example, OneCoin with the slogan ‘then people will not remember Bitcoin anymore’. And the OneCoin results are already well known.

Many Altcoin projects were born with a series of advertisements that were too real. However, these projects never go on the right roadmap or have actual products. It is for this reason that many people begin to become bored. After all, Bitcoin eventually left a greater influence.

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