Bitcoin Share Drops from 70% to 43% in 4 Months... Signal of Altcoin Bubble

[Photo by Reuters]

[Asia Economy Reporter Park Byung-hee] Recently, in the cryptocurrency market, Ethereum, Dogecoin, Binance Coin, and others have been gaining attention instead of Bitcoin. Cryptocurrencies other than Bitcoin, including Ethereum, are collectively categorized as altcoins and are attracting investors' interest.

A report by JP Morgan Chase and DataTrek Research, released on the 7th, quantitatively illustrates this trend.

Bloomberg News, citing the report on the 10th (local time), reported that the current cryptocurrency market size is $2.6 trillion, and Bitcoin's share in the cryptocurrency market has decreased from 70% at the beginning of this year to 43% currently.

The reason JP Morgan Chase and DataTrek mentioned the sharp decline in Bitcoin's share is to warn about the bubble risk in the cryptocurrency market. In terms of the stock market, it is as if the leading stock's share is rapidly decreasing, indicating how unstable the market is.

JP Morgan analyzed that Bitcoin is rapidly losing its shine due to so-called altcoins such as Ethereum, Dogecoin, and Binance Coin, and paradoxically, this could be a warning sign showing that altcoin prices are excessive. The sharp reduction in Bitcoin's share is also a sharp increase in altcoins' share and a signal indicating the bubble risk of altcoins.

Compared to a year ago, Ethereum's price has risen by 2000%, and Dogecoin by 20,000%. Ethereum surpassed $4,000 for the first time last week, but JP Morgan analyzed the current fair value of Ethereum to be $1,000.

Bitcoin reached an all-time high of $64,870 last month and has been on a downward trend since. According to CoinDesk, as of 10:40 AM Korean time on the 11th, it is trading around the $55,000 level.

Bloomberg analyzed that the reason for Bitcoin's declining share is that investors have become more comfortable with cryptocurrencies other than Bitcoin. In fact, because Bitcoin's price is high and buying it is burdensome, individual investors are purchasing altcoins, which is driving up their prices. JP Morgan pointed out that individual investors can quickly realize speculative profits. They also explained that at the end of 2017, Bitcoin's price surged sharply but then plummeted due to individual investors.

DataTrek co-founder Nicholas Colas warned, "Based on past cases, if Bitcoin's share falls to 40%, the prices of cryptocurrencies other than Bitcoin could sharply decline."

This content was produced with the assistance of AI translation services.