Bitcoin, Litecoin, Ethereum, and Bitcoin Cash, cryptocurrencies that are considered as reserve assets or safe investments in the highly volatile cryptocurrency market, has recorded large gains over the past 24 hours.
Throughout today, January 6, the value of many alternative cryptocurrencies have declined. Cryptocurrencies which had recorded massive gains in the past week such as Tron, Ripple, and Cardano have struggled to recover from their previous corrections, while bitcoin, Litecoin, and Bitcoin Cash have risen by more than 10 percent over the past two days.
Litecoin in particular, which fell behind Stellar as the ninth largest cryptocurrency at a certain point this week, recorded a swift recovery, demonstrating a 20 percent increase in value and obtaining a $16 billion market cap. Although Litecoin still remains significantly lower than Cardano, it had made a major upward movement for the first time over the past week.
The rise of bitcoin, Litecoin, and Bitcoin Cash has shown that the extremely risky and volatile cryptocurrency market considers cryptocurrencies that have existed in the market for the longest period of time as reserve assets or currencies. Bitcoin in particular has become the safe bet within the global market.
Over the past 24 hours, the cryptocurrency market has a seen a trend in which investors in alternative cryptocurrencies have cashed out their returns from their ultra high profit trades to bitcoin, to secure their profits. Consequently, the price of bitcoin surpassed $17,000, briefly achieving $27,000 in the South Korean market.
Bitcoin is acknowledged as a safe haven asset and reserve currency within the global cryptocurrency market because of its market valuation and the infrastructure around its network. Some of the largest financial institutions and banks such as the Chicago Board Options Exchange (Cboe) and CME Group have increased the liquidity of the cryptocurrency, opening the market for institutional investors and retail traders.
Because of its strong network effect and existing infrastructure, bitcoin remains more stable and less volatile than other cryptocurrencies, and tend to move relatively slow in comparison to other cryptocurrencies in the market.
The launch of bitcoin exchange-traded funds (ETFs) by the New York Stock Exchange (NYSE) and Cboe with the approval of the US Securities and Exchange Commission (SEC), will further increase in the liquidity of bitcoin and enable it to solidify itself as a major asset class, further increasing its value and accessibility to the traditional finance sector.
Litecoin was briefly overtaken by Tron, a blockchain-based entertainment platform with more than 300,000 active users in terms of market valuation.
At the time, Charlie Lee, the creator of Litecoin and former Coinbase executive, reaffirmed that he was not concerned with the short-term price trend of Litecoin, because other indicators showed that Litecoin was a more active blockchain network than its competition. Lee said:
“For those asking, I care very little about market cap rank. I care more about the chart on the left (# transactions) than the chart on the right (price). The Litecoin team and I are focused on the chart on the left. People need to actually use Litecoin. The price will follow.
As you can see, Litecoin is doing very well in terms of growth in usage. This chart shows the growth in the past year compared to other coins. Let’s not let price distract us from what’s actually important. This is what I mean by conflict of interest. No LTC, no distraction.”
Whether Litecoin can take over Cardano and regain its spot as the fifth largest cryptocurrency remains uncertain. But, if it can sustain its current momentum, it could be a possibility in the mid-term.
Last modified: May 20, 2020 9:13 PM UTC