Throughout May and June, even during bear markets and strong downward movements, tokens performed relatively well against bitcoin. So far, in July, bitcoin has proven its dominance through a stable performance against the US dollar.
Why Bitcoin is King, For Now
Over the past three months, tokens have had a solid basis to increase in volume and price, mainly due to two major factors: the approval of ether by the US Securities and Exchange Commission (SEC) as a non-security and the unforeseen move of Coinbase to add two tokens in the near future.
As CCN previously reported, on June 15, the US SEC clarified for the first time in history that BTC and ETH, the native cryptocurrency of Ethereum, are not considered as securities under the financial laws of the US. The SEC emphasized both cryptocurrencies are maintained by a decentralized group of developers and do not benefit a single entity.
The approval of the SEC of bitcoin and ether eventually led Coinbase, the world’s largest cryptocurrency exchange and brokerage, to pursue the path of directly adding tokens, despite its efforts of acquiring decentralized cryptocurrency exchange Paradex, which Coinbase initially intended to integrate into Coinbase Pro to circumvent the entire process of becoming compliant with rigorous US securities regulations.
The Coinbase team dismissed the uncertainty surrounding the regulatory nature of ERC20 tokens, iand moved towards integrating Basic Attention Token (BAT), the token used by Brave Browser, and 0x (ZRX), the cryptocurrency exchange protocol Paradex is based on, by actively cooperating with the US SEC and local financial authorities.
Still, notwithstanding the rapid improvement in the regulatory aspect of tokens and the cryptocurrency exchange market, tokens have continued to freefall throughout July, even against bitcoin.
The dominance of BTC started to bounce back, first reaching 40 percent, and ultimately recovering up to 45 percent, which it had not been able to secure since November, 2017, when its dominance index was at 58.67 percent.
Over the past 24 hours, both major digital assets and tokens that have performed well against both bitcoin and the US dollar throughout early 2018, fell by more than 10 percent on average, while bitcoin maintained its support level at $7,400, hovering around $7,460.
As of July 20, Aelf (ELF), Ontology (ONT), ICON (ICX), 0x (ZRX), Zilliqa (ZIL), and Tron (TRX), all of which recorded 50 to 200 percent gains against BTC in April, fell by 7 to 12 percent, with ICX falling to 0.0001835 BTC, from its 0.0009194 BTC peak in January.
Reason Behind Bitcoin’s Dominance
In bear markets, dominant cryptocurrencies tend to outperform tokens and small digital assets quite drastically, as investors look for store of values that are more stable than lower market cap coins.
Consequently, over the last 48 hours, while bitcoin, ether, and Bitcoin Cash have only fallen by 1 to 3 percent, tokens have fallen by 7 to 20 percent against bitcoin.
Featured image from Shutterstock.
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Author: Joseph Young