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Bitcoin Flexes its Muscles as Cryptocurrency Market Tumbles to 2018 Low

Last Updated March 4, 2021 3:39 PM
Josiah Wilmoth
Last Updated March 4, 2021 3:39 PM

The cryptocurrency market crossed an unwelcome milestone on Wednesday, as it not only fell to a year-to-date low but also surpassed  the Nasdaq Composite Index’s 78 percent peak-to-trough decline in the throes of the dotcom bubble that kicked off the new millennium.

Cryptocurrency Decline Now Worse Than Dotcom Bubble

Following a fresh rout this week, the cryptocurrency market cap — the combined nominal values of all coins and tokens in circulation — is now valued at just $186.8 billion, down a tech bubble-style 78 percent from the $835.7 billion all-time high its set on just eight months ago, on Jan. 7.

Source: CoinMarketCap

The crash is even more pronounced when viewed without bitcoin’s stabilizing effects. Since peaking above $550 billion in early January, the altcoin market cap has declined approximately 85 percent and is now valued at $78.4 billion. For reference, ripple (XRP), the third-largest cryptocurrency, was once nominally valued at $145 billion.

cryptocurrency altcoin market cap
Source: CoinMarketCap

Remarkably, the altcoin market cap is valued lower today than it was one year ago, when, even after the uncertainty surrounding China’s ban on cryptocurrency trading and initial coin offerings (ICOs), altcoins collectively traded above $80 billion on Sept. 12, 2017.

Bitcoin Dominance Hits 9-Month High as Altcoins Crash

The rout is perhaps even starker when viewed in its individual components. Thirteen of the 15 most valuable cryptocurrencies by market cap have declined at least 78 percent from their all-time highs, according to data from OnChainFX .

cryptocurrency prices
Source: OnChainFX

Six, meanwhile, have declined at least 90 percent, including XRP (93 percent), bitcoin cash (90 percent), cardano (95 percent), IOTA (91 percent), tron (94 percent), and NEO (92 percent).

Bitcoin, of course, has not been immune to the decline. Since peaking near $20,000, the flagship cryptocurrency has taken a 69 percent hit and is now testing whether support will hold at $6,000.

Even so, bitcoin’s position within the cryptocurrency market itself has seldom been stronger, at least since the beginning of the ICO boom, which has now swelled the number of cryptocurrencies to nearly 2,000.

bitcoin dominance index
Source: CoinMarketCap

Bitcoin dominance now stands at a commanding 58 percent, its highest point since Dec. 13, 2017. That’s a notable about-face since January when bitcoin briefly accounted for less than one-third of the total market cap.

Indeed, it’s been a long time since anyone has mentioned the “Flippening,” and Roger Ver’s May prediction that ethereum would surpass bitcoin in 2018 appears increasingly comical.

Bitcoin, it seems, is still the king.

The Dotcom Bubble’s Silver Lining

Often lost in the dotcom bubble comparison is that, though many companies went bust, tech stocks as an asset class eventually came back with a vengeance, and the Nasdaq Composite Index now stands far above its dotcom bubble peak.

Nasdaq composite index chart
Nasdaq Composite Index | Source: Yahoo Finance

There’s no guarantee that the cryptocurrency market’s trial-by-fire will produce similar results, but if it is truly analogous to the dotcom bubble, the real question isn’t when the market will crash to zero, it’s “Which cryptocurrency is Amazon, and which is Pets.com?”

Featured Image from Shutterstock.