The surge in the total volume of trade of altcoins like XRP (Ripple Coin), MONA, Litecoin, etc. is noteworthy. For amateurs reading the article, ‘altcoins’ is the term used to refer to any crypto mined and launched after Bitcoin (BTC). These coins, over time, begin to separate from their originator and form their own privacy features and different supply schedules. Several Bitcoin-altcoin trading pairs also emerged with the inception of altcoins, which led to an increase in transactional activities. Traders leveraged the fluctuations of the market and earned high-risk rewards.
The growth of altcoins and their corresponding Blockchain systems is a testament to the era of examination, experimentation, and maturation as more types of crypto assets have become available.
In the article, we discuss how Bitcoin dominance in the crypto market share touched its lowest point and its recovery. We also look at the reasons behind the increase in Bitcoin holdings of Japanese traders and finally, we see why they’re choosing to trade Bitcoin over altcoins like XRP and MONA.
Slump of Bitcoin
On August 7, Cointelegraph reported that the Bitcoin dominance ended as it slumped to its 12-month low value. The progenitor of all altcoins, Bitcoin, which recently experienced a rally, fell to its lowest price since August 2019, indicating the revived strength of altcoins.
Bitcoin’s dominance in the total market capitalization reduced to 61% from 67% in mid-May and close to 70% since September last year.
For crypto experts, this was enough evidence to believe that altcoins began recapturing their position in the crypto market. Bitcoin’s relative slump in dominance came as the total market capitalization of the crypto market, tested considerable resistance amidst pushing into its 1-year highs. An excess of $11 billion would lead to the overall market capitalization breaking the $370 billion mark and going beyond it for the first time since May 2018.
Even as Bitcoin rallied in July into five-figure values, the month also recorded the market capitalization of altcoins at $140 billion for the first time in 2 years. The monthly trading report released by Binance for July also suggested renewed strength in the markets of altcoins. For the month of July, altcoins grew from 32% to 40% to represent the volume of Binance futures.
Binance credited the growing popularity of Ether (ETH) accumulation and DeFi (Ethereum-based decentralized) protocols for the exceptional performance of altcoins.
Increase in Japanese Holdings During the Pandemic
The JVCEA or the Japanese Virtual and Crypto Assets Exchange Association- an independent organization, monitoring the entire crypt industry in Japan, recently released a report on Japanese holdings of cryptos in March.
The report revealed that about 170,000 BTC got held in the month on Japanese exchanges, which was 11% higher than what was held in February. RippleCoin or XRP registered a growth of 6.4% as XRP worth $3.2 billion was held. Ether was up about 6% to $1.14 million. The number of other altcoins like Litecoin, MONA, NEM (XEM), and Bitcoin Cash (BCH) also increased in March.
The total magnitude of Bitcoin spot trading was registered at 617.3 billion yen or $5.8 billion in March. The number is 11 times more than the trading volume of XRP, the second-most traded crypto in the month.
Due to the onset of the Coronavirus pandemic in March, bitcoin was down 25%. No crypto enthusiast can ever forget March 12, the ‘black Thursday’. On this day, Bitcoin slumped to $5000 from $8600 at the beginning of the month.
However, what’s interesting is the growth in the volume of holding of major cryptos on Japanese exchanges during this ambiguous period. Some crypto experts believe that the Japanese weren’t trepidatious to purchase and hold more assets after the sudden collapse of the market. It may also be possible that Japanese investors were sending more cryptos to exchanges for sale.
Yuya Hasegawa, a market analyst, spoke to Cointelegraph, explaining how there’s an inverse relationship between price movement and user’s holdings of cryptos.
This has been proven to be true even in practice as crypto investors around the world accumulated assets during the pandemic. Several UK-based crypto trading apps also suggest the same. Now, we discuss why most Japanese investors who’re entering the crypto market are choosing to purchase and hold Bitcoins over other altcoins.
Why are Japanese Investors Choosing Bitcoin over Other Altcoins?
The JVCEA published a report on August 19 that showed the dominance of Bitcoin relative to other cryptos in the Japanese crypto market. The data revealed that in April, Bitcoin accounted for 87% of the total crypto market in Japan. Now, 87% is a huge market share with no altcoin coming even close to it.
The self-regulatory authority also reported that the number of active accounts for crypto trading grew by 13,987 in the month, a record high at the time. Yuya Hasagawa suggested that Japanese investors might be losing their trust and overall interest in altcoins. Given the increase in the number of active accounts, it might be accurate to infer that most new investors find Bitcoin the most reliable and safe crypto, especially in these equivocal times.
Hasagawa’s inspection also indicates the fact that XRP was one of the biggest losers in April. The altcoin, which grew about 7% in just the previous month and once accounted for 40% of the total volume of assets held, accounted for only 5% of the market share in April. Bitcoin had lost its dominance in the Japanese crypto market in February because of the growing popularity of Monacoin (MONA), but regained the hegemony in March, during the onset of the pandemic.
According to the data released by CoinMarketCap, Bitcoin’s share of the world’s crypto market hasn’t exceeded 70% since the first quarter of 2017. As of August 31, its market share stood at its lowest point since one year. It accounted for 58% of the entire $373.6 billion crypto industry.