Bitcoin is losing its “first-mover competitive advantage” to the over 16,000 other altcoins in the cryptocurrency market according to the CEO of Euro Pacific Capital, Peter Schiff, a known Bitcoin skeptic.
In a tweet, the gold investor pointed to Bitcoin’s declining market dominance to support his claim, adding that as even more cryptocurrencies flood the market, as they were very easily created, Bitcoin’s first-mover advantage will reduce.
With over 16,000 alternative cryptos to choose from, Bitcoin’s market dominance is now below 40% for the first time since June of 2018. With an unlimited supply of easily created cryptos with virtually identical properties, Bitcoin is losing its first-mover competitive advantage, Schiff said.
Are there truly alternatives to Bitcoin?
Indeed, Bitcoin’s market dominance has fallen considerably this year. The market cap of Bitcoin which used to account for over 70% of the value of the entire crypto market earlier in the year has fallen to around 40%. The reduction has been due to the overall growth of the crypto market, Bitcoin inclusive.
In the past year, the market capitalization of Bitcoin has grown 95.08% from $492.51 billion to currently be around $960.78 billion after having stood above the $1 trillion mark for a while. Similarly, the market capitalization of altcoins has been on the rise, with a lot of them including Ethereum (ETH), Solana (SOL), and the memecoin Shiba Inu (SHIB) outperforming Bitcoin.
However, market proponents are arguing that these altcoins, regardless of their growth, are not competitors to Bitcoin or even alternatives to it as Bitcoin is the only cryptocurrency that is considered to be a store of value or digital gold as it is often called. According to Schiff’s son, Spencer Schiff who is a Bitcoin proponent, even proponents of altcoins acknowledge that they are not in competition with Bitcoin for its position at the top of the crypto market as Bitcoin was in a category of its own.
Some proponents are even considering the reduced market dominance of Bitcoin to be a bullish signal. According to Vijay Boyapati, the author of The Bullish Case for Bitcoin, the last time Bitcoin’s crypto market dominance reached 40% which was in June 2018, it was a great opportunity to buy the benchmark cryptocurrency. Therefore, he considers Schiff’s pointing out the Bitcoin dominance metric to be a signal that the market has reached the bottom.
Bitcoin continues to outperform Gold
The economist and strategist, Schiff, has had a well-pronounced disregard for Bitcoin and a strong one regard for gold. Schiff has been a critic of Bitcoin and every move the cryptocurrency makes. Recently, he called for the dissolution of the SEC because the commission in approving a Bitcoin futures ETF was invariably giving a government endorsement of Bitcoin. He has also criticized El Salvador’s president Nayib Bukele, calling his decision to adopt Bitcoin as legal tender in the central American country irresponsible and a waste of taxpayers’ money.
Meanwhile, gold, which is a strong proponent of gold, has been struggling and has been outperformed by Bitcoin. Year to date, the return on investment on gold is down 3.71% compared to Bitcoin’s 77.64% increase. Market analysts and observers are optimistic that Bitcoin is poised to perform even better come 2022.