Despite the multiples announcing Bitcoin (BTC) supporters, it was hard to imagine that the cryptocurrency bull cycle would take it this far. Like Bitcoin, the entire cryptocurrency market is showing sparkling form at the start of 2021. After a generalized rise in prices that even benefited XRP for a while, it is around market capitalization cumulative market to shine. For the first time in its history, it comes from cross the $ 1 trillion mark.
A record fueled by several factors
It is obvious that the rise in the market capitalization of the cryptocurrency market owes a lot to the recent performance of Bitcoin. However, it would be fairer to admit that several other factors come into play at the time of justifying this new record. A major element of the crypto space in 2020, DeFi will have allowed many investors and their capital to dynamise this market. It has also seen its own market capitalization regularly post records with an average of a new billion added per week during its cruising speed. The sector will then have left room for institutions who were particularly interested in Bitcoin.
While this trend has allowed the mother of cryptocurrencies to post 68.5% dominance, Ethereum as the top altcoin is doing with 13.3%. Like the two main market leaders, the other alcoins have also experienced a weekly growth of 50% for the most part. All these factors together have therefore allowed, according to analysts, to propel the market capitalization to this new record at the start of the year. This one would have been even more important or earlier if the value of XRP had not experienced an impressive drop.
A different development from that experienced by the market in 2017
While many analysts compare the current bull cycle and subsequent market runaway to that of 2017, some argue that they have nothing in common. This is particularly the case of Meltem Demirors current director of strategy at Coinshares. He said: “It was a time of madness and scum, and 2017 was a similar year for many of us. Lots of tokens, lots of names, lots of flying capital. This cycle is so different because the narrative is very Bitcoin focused “.
He refers in particular to an old criticism that often comes up when discussing the 2017 market, namely that this one was a bubble shot by the FOMO. At the time, the market capitalization of the entire market had reached a record $ 829 billion. However, it had been followed by two years with a downward trend without returning to this level.
The year 2020 will have been particularly fruitful for the cryptographic space and especially Bitcoin despite a slow start and the arrival of the coronavirus pandemic. With Bitcoin still favored by investors at the start of the year, several hodlers remain stuck on positions to the point of creating a liquidity crisis in the market.