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Needless to say, the bears were not kind to the crypto industry in 2018. The aggregate value of all cryptocurrencies fell as a "falling knife", while retail investors withdrew from this mass market and the clamor has dissipated. Yet, even in the midst of this devastating crisis, which beat this market to hell and back, Bitcoin (BTC) quickly became refuge from the storm.
Bitcoin has become a refuge in the storm of 2018
Not only did BTC outperform its counterparts on the lower steps of Crypto's long scale, but also the fundamental performance of the underlying asset network was impressive. As reported earlier by NewsBTC, a major industry commentator said that 2018 was the best year for Bitcoin, contrary to the mainstream media. The data of Armin and Jameson Lopp, two important "Bitcoiners", have accentuated this fact.
In a broad report, Lopp, the head of technology at the cryptocurrency solutions provider Casa, explained that "with any metric [other than price], the system is improving and growing. "Among a number of other bullish statistics, the industry's longtime participant revealed that the number of ATMs supported by BTC increased by 100% in 2018, while the network hashred doubled. when the cryptocurrency community swelled on Reddit, provoking discussions about the propagation of scaling protocols, namely SegWit and Lightning Network.
Related Reading: VC Investor: Fundamentals Show Bitcoin and Etereum Oversold in the Bear Market
Although the Bitcoins undoubtedly have a good performance, many have left to wonder what has allowed the network to outperform its juniors.
Institutional focus on Bitcoin
At the end of July, the fervent investor of encryption Mike Novogratz said that he expected BTC's hegemony over cryptocurrencies to continue over time, in particular due to "interesting institutional projects" surrounding the asset. Only a week later, Tom Lee of Fundstrat said that "Bitcoin is the best home in a difficult neighborhood". Like Novogratz, the effective internal encryption expert at Fundstrat noted that the proposed institutional products allowed the business to outperform other cryptographic assets.
While Lee's comments are a month old, his point is still valid. At the time of writing this book, most of the crypts pushed by financial institutions were focused on the main digital resource. Bakkt's physical contracted futures contracts will start with BTC, while questions on exchange-traded funds are related only to Bitcoin. Many experts have predicted that this industry trend will likely continue in the near future.
And while there are no institutions actively investing in companies that support the fundamentals of Bitcoin, many have said that this influx of interests has led industry builders to re-focus their efforts on BTC. As the ancient saying reads, "follow the money".
Not only do the institutions focus on the main cryptocurrency, but so are the common traders and the average Joes. Although Epic Games briefly accepted Monero payments (XMR) for Fortnite brand products, for the most part, crypto-friendly forward-thinkers have openly focused their efforts on Bitcoin. Case in point, Paris Tabacs, a French chain of corner shops, has recently started selling BTC vouchers in euros, refusing to offer support for other cryptocurrencies.
The collapse of Crypto Small Caps
While an institutional push for BTC probably allowed the underlying measures of the network to swell, the quasi-ubiquitous collapse of small caps could have given Bitcoin more room to play, so to speak. Eric Conner, a major supporter of Ethereum, took his Twitter page to discuss the "spiral of death" of low to mid-cap cryptocurrencies. Conner explained that due to the bearish market of 2018, some cryptocurrencies have almost completely disappeared hasrates, creating an environment for a low-cost Proof of Work (PoW) attack.
These attacks, which often devastate chains and their surrounding ecosystems, leave assets without liquidity and community support, essentially dying in a state of isolation induced by the bear market.
Spiral of death of coins with low-middle cap:
– Low hash rate due to bear
-Easy to 51% PoW attack
– Price drop and hash drop
– Another 51% PoW attack
-Exchange delisting due to the loss from double spending
-Chain takeover and no place to tradeI expect to see this story a lot in 2019.
– Eric Conner (@econoar) 10 January 2019
Conner's comments are not theoretical, quite interesting. At the beginning of this week reports emerged that Ethereum Classic was hit by a 51% attack, allowing malicious users to double ETC tokens. Charlie Lee, the creator of Litecoin, said it cost only $ 4,000 to attack the Ethereum Classic chain for an hour – an "economic" form of attack, just as Conner had said. And because these reports have propagated, users have resorted to Twitter to claim that the Coinbase package offer has eliminated ETC – just as Conner once again explained in his "death spiral".
But then, apart from the insecurities of the PoW, smaller projects have been victims of a number of other shortcomings. Not only do most of the less known but highly publicized blockchains have been able to keep their ambitious promises, but many have turned out to be openly scammers.
This was reflected in the dominant market share of BTC. From January 2018, the measure has seen a drastic movement, bouncing from a historical low of 32% to 58% recently, in a probable testimony of the rise of Bitcoin on the underlying projects.
The analysis made by ByteSize Capital argues that the rebirth of Bitcoin over cryptographic resources is a byproduct of the cycles of expansion and braking of the asset. According to NewsBTC on the anti-fragile nature of Bitcoin, the independent consortium for cryptography research said that, contrary to bullrallies, bear markets require investors to take higher shares in BTC.
With some analysts arguing that this bear season could extend beyond previous forecasts, Bitcoin could continue to devour important segments of the cumulative crypto market capitalization.
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