Following a downgrade of US Government debt by Fitch, Bitcoin appears to be holding steady. Surprisingly enough, in contrast with the market panic of 2011 when the S&P downgraded US debt, the present market scene seems fairly composed. This is attributed to the positive earnings presently being reported by companies. However, comparing Bitcoin’s performance to its 2011 stance uncovers interesting insights.
During the 2011 panic, Bitcoin hadn’t matured as an asset class which resulted in poor correlation to macroeconomic events. When the downgrade happened, Bitcoin fell 33% to $6.6 but jumped 20% to $7.9 the next day with a trading volume only approximating $200,000.
By comparison, Bitcoin recently registered an upswing of 2.2% and Ether climbed by 0.8%. CoinDesk’s Market Index (CMI) also rose by 1.43% to 1,286 signifying the upgrading state of digital assets, in stark contrast to the East’s sliding financial markets.
A closer look at Bitcoin’s standing in July reveals a decline in its dominance which was contrary to its rising phase in June. The Head of Research at CoinDesk, Todd Groth, attributes this to the absence of catalytic factors that substantially drove Bitcoin’s price higher in June. Ripple’s partial victory in a court case against the Securities and Exchange Commission (SEC) also favorably impacted altcoin investors by raising hopes that the SEC couldn’t tag other tokens as securities.
The Ripple vs. SEC conflict triggered a catch-up game with altcoins falling closely behind where Bitcoin initially was. Following the court ruling, Coinbase, Kraken, and other exchanges took measures to re-list or announced plans to re-open trading of XRP tokens. Bitcoin ended July with a 5% decline but remained upbeat as the BTC dominance rate slipped below 49%.
The ebb and flow of dominance within the digital currency assets call for all eyes on deck. Bitcoin, Ethereum, and other altcoins bear promise juxtaposed against unprecedented events and transformative moments that the digital asset market continues to offer. All hold their breath as they look forward to the unfolding of another chapter in the cryptocurrency saga that is certain to have ripples across the financial landscape. Through it all, the crypto community continues to learn, evaluate and make strategic moves.
Source: Coindesk
