Bitcoin's Dominance Over Altcoins Soars, According to Study
The Lowdown on Crypto: Altcoins vs. Bitcoin
Recent studies show that most alternative cryptocurrencies (altcoins) underperform when compared to Bitcoin (BTC) in the long run. Bitcoin's role as a stable investment in the wild and fluctuating crypto market is becoming increasingly apparent.
In a series of tweets, Swan, a financial services company specialized in Bitcoin, shared its insights on the topic.
"Altcoins don't just underperform Bitcoin, they collapse against it," Swan tweeted.
The analysis, covering the top 300 altcoins over five years, revealed that the median altcoin took just 10-20 months to lose 90% of its value relative to Bitcoin after hitting its all-time high (ATH).
Terra (LUNA1), Ontology Gas (ONG), and Bitgert (BRISE) were among the fastest depreciating assets, hitting the 90% drawdown mark in under two months. Established altcoins like Cardano (ADA), XRP (XRP), Litecoin (LTC), and Monero (XMR) took longer to depreciate, but they still lagged behind Bitcoin.
Out of 45 altcoins that have not yet experienced the 90% drop, Swan's data suggests that they are simply delaying their inevitable losses. The average drawdown for these altcoins is 76% from their peak value, with the best-performing altcoin still down by 43% compared to BTC.
"Bitcoin remains the benchmark for capital preservation. These assets don't hedge Bitcoin, they bleed against it," Swan added.
The findings indicate a systemic issue within the altcoin market. Altcoins, often marketed as alternatives to Bitcoin, fail to deliver sustained value over time compared to the leading cryptocurrency.
Swan also highlighted that the long-term outperformance of altcoins is exceptionally rare. Moreover, survivorship bias, the tendency to focus on successful projects, may have hidden the widespread decay across the market.
"With performance like this, it's astonishing that altcoins continue to exist. Then again, humans love gambling," John Haar, executive at Swan, commented.
Altcoin Season: A Fading Memory?
The growing saturation in the altcoin market is one of the main concerns. In the past month, over 1.8 million tokens have been created[1], but the vast majority fail to deliver[2]. Meaningful alterations have delayed the long-anticipated "altcoin season" and even led some analysts to argue that it may never return.
As Bitcoin's dominance and investor interest grow, accompanied by institutional adoption and increased regulatory attention, altcoins have a harder time maintaining their relevance and value.
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[1] CoinMarketCap Data
[2] BeInCrypto Report
[3] Investopedia on Bitcoin
[4] Investopedia on Altcoins
[5] HuffPost article on Bitcoin as a Hedge
- The performance of most altcoins, when compared to Bitcoin, isExceptionally rare and shows long-term underperformance.
- Bitcoin's role as a stable investment in the crypto market is becoming increasingly apparent, with altcoins often failing to deliver sustained value over time.
- In a fragmented market, altcoins struggle to maintain their relevance and value as Bitcoin's dominance and investor interest grow, with institutional adoption and increased regulatory attention.
- Established altcoins like Cardano, XRP, Litecoin, and Monero took longer to depreciate but still lagged behind Bitcoin in the long run.
- Swan's analysis revealed that the median altcoin took just 10-20 months to lose 90% of its value relative to Bitcoin after hitting its all-time high.
- John Haar, executive at Swan, commented that with performance like this, it's astonishing that altcoins continue to exist.
- As the number of created tokens grows, the long-anticipated "altcoin season" may never return due to the vast majority of tokens failing to deliver meaningful alterations.
