Bitcoin is rapidly making its own case this year in 2024 with growing separation from the altcoin field. Backed by increasing institutional adoption, improved regulatory guidance and growing liquidity on U.S. exchanges, Bitcoin is reclaiming its former glory.
Several factors contribute to Bitcoin's current strength. Demand and prices Institutional flows into Bitcoin are at all-time highs, evidence of acceptance of the Bitcoin by old school financial institutions. Regulatory clarity, while still a work in progress, gives a stronger foundation for investing in Bitcoin. This higher liquidity on U.S. exchanges serves to reinforce Bitcoin’s dominance as the world’s leading cryptocurrency.
While Bitcoin continues to do well, Ethereum and the larger altcoin market tell a different story. The previous top ten altcoins had a market share of 63% of the total altcoin volume combined. That’s a huge increase from only 50% a few months ago. This level of concentration indicates that capital is moving into the most established altcoins, and the smaller cap tokens have increasingly been unable to find their footing.
Ethena’s USDe is turning heads in the altcoin space. This upcoming stablecoin has quickly and decisively taken attention and market share to become the most prevalent alternative. Its untested and unique approach has led to regulatory scrutiny. This underscores the risks that all transformative projects are walking even as regulations and people evolve. USDC is another stablecoin in the market.
Last week, Bitcoin almost broke its previous all-time high, a testament to its staying power and the conviction of its investors. Robust U.S. jobs data helped to quell dreams of immediate interest rate cuts, making way for a market-wide retreat. Despite this failure, Bitcoin is looking strong overall.
Bitcoin’s risk-adjusted returns are now higher than most altcoins. Bitcoin’s Sharpe ratio already beats the likes of today’s altcoin darlings such as Solana (SOL) and XRP at their high-flying days. This result reflects an improved risk-reward profile for Bitcoin investors.
