A brief outlook on: Crypto Dominance Dilution Theory
Before we plunge down the hole that is Crypto a question for you:
Would you rather: 1 Bitcoin or 1 of any other cryptocurrency in the top 250?
, the growth is actually from 1,391 to 5,522; an increase of 297%). *For the sake of staying consistent we will utilize only the metrics from CoinMarketCap.
According to the Crypto Dominance Dilution Theory, As the amount of alternative Crypto assets grows, Bitcoin will lose its Market Dominance and ultimately its influential position in the crypto-verse. That does not seem accurate; frankly its looking totally wrong.
BTC Market Dominance — —— — — Value — — — — — Crypto Asset variations
32.76% — — — — — — — — — — $14,000 — — — — — — — — 1,391
51.25% — — — — — — — — — — $4,000 — — — — — — — — — 2,104
The Market Dominance of BTC should have squeezed its way further down from 32.76% towards the zone between 20–25%. And yet, as we have observed, the market reacted otherwise…
🎭 A Divergence, an increase in Market dominance while a simultaneous decrease in unique positioning 🎭 (Being 1 of 1,391 is more exclusive than being 1 of 2,104.)
A Divergence within a divergence — the first divergence(above) is then compounded with another divergence that we identified between market dominance and asset value.
This overlapping of divergences creates a 3 dimensional representation of correlation between the metric fluctuations. (I am sorry i do not have the know how, on creating multi-dimensional graphic models of economic interrelationary [this is not an actual word] aspects.)
Essentially, we see that the amount of projects was growing and that the price of Bitcoin was simultaneously caving in on itself. Therefore, we begin associating the introduction of new digital crypto assets with some form of devaluation or dilution.
It is nothing more than:
- Manipulation of Masses (surprise surprise)
- A lack of Informational Clarity
- Social Ineptitude of Finances & Mathematics
Hold Up for just a second…
I’m not trying to downplay this theory at all. In fact, i want to thank the researchers over at St. Louis Federal Reserve Bank for shining light on commonly underappreciated crypto metrics.
I am, however, saying it is important to emphasize that the theory proposed by the St Louis F.R.B. is currently dangerously imperfect…
For one thing, it doesn’t seem to account for the reason of the last parabolic growth (altcoins/ico’s). Additionally, it does not account for the macro metrics at play during bear cycles in such speculative markets.
What’s more, is that there is NO way to truly account weather a project will be a burden or a blessing to another loosely correlated asset. It is MUCH more likely (in my eyes) that an actor interested in alternative currencies still entered (and will likely exist) the market through Bitcoin.
⚖ Moment of Truth ⚖
Circa: Beyond 2018
You picked a crypto at the start of this. Your options were Binary:
Bitcoin or Not Bitcoin.
If you chose any cryptocurrency other than Bitcoin — i implore you… CHANGE MY MIND. I chose the BTC.
For those of you that chose Bitcoin, id like to congratulate you… you are informed enough, aware enough, and brave enough to understand where we are headed and what the future holds.
🥂 Stay woke my friends 🥂
P.S. A final question for you;
If not Bitcoin, then what?
-BitCoin vs AltCoin- was originally published in Data Driven Investor on Medium, where people are continuing the conversation by highlighting and responding to this story.