Bitcoin has been underperforming its cryptocurrency status over the past few weeks. The Bitcoin price news did not show much increases and online data suggests that Bitcoin’s dominance – the percentage of the market made up by BTC – has fallen from 66% to 64.9% in the past three days. The top crypto analysts believe that altcoins are highly risky to invest in right now, mostly because of the downtrend that BTC initiated as of lately.
In order to contextualize this, at the time of writing, the price of Bitcoin is down by 6% and is at $6,150 while both Ethereum and XRP have posted strong performances compared to it. There is only a little to explain this trend – a top cryptocurrency fund recently reduced its exposure to altcoins and increased its allocation to Bitcoin. Below, we are posting the reason for this move.
The “Crypto In This Crisis: Pantera Blockchain Letter, March 2020″ is a review where Dan Morehead and Joey Krug (the co-founders of the blockchain centric fund Pantera Capital) explained that Bitcoin will “probably outperform other tokens for a while.” They said that it is one of the crypto projects that are entrenched and do not rely on funding per se:
“It’s a project that’s already built, it works, it has an 11-year track record. Many newer blockchain and smart contract projects are still in development and might be stressed to raise funding to complete their development,” their statement reads.
Morehead and Krug were in the focus of the crypto news for explaining that “there is typically a fight to quality” or flight to safety “where people want to put money in the mega-caps, the safest asset, “the Treasuries” of the industry.” In the case of cryptocurrency assets, Bitcoin is a Treasury bond as it is much more liquid than the rest.
Altcoins are highly risky to invest in right now mostly because of the fact that the market recentralizes around BTC. Earlier in the letter, Morehead said that the unorthodox monetary and fiscal response to the crisis will be what is extremely bullish for Bitcoin.
“As governments increase the quantity of paper money, it takes more pieces of paper money to buy things that have fixed quantities, like stocks and real estate, above where they would settle absent an increase in the amount of money. The corollary is they’ll also inflate the price of other things, like gold, bitcoin, and other cryptocurrencies,” he wrote.
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