This article will discuss the reasons why Bitcoin monopolizes the cryptocurrency market, not only in the past, but now, and will continue to do so in the future.
The reasons why Bitcoin monopolizes
Capital Markets and Regulatory Endorsement
Many countries around the world have approved the listing of Bitcoin ETFs, especially the United States, which has officially approved the listing of Bitcoin spot ETFs in January 2024 (please click on the analysis of my post of “Bitcoin ETF spot trading approval has far-reaching impact“). As of September 26, 2024, there are 36 ETFs trading in the US market, with a total market value of US$61.537 billion.
In July 2024, the United States further approved the public trading of Ethereum ETF. As of September 2, 2024, the SEC has approved 8 spot Ethereum ETFs. As of September 26, 2024, the total market value is US$158 million.
First mover advantage
As the first cryptocurrency to appear in the world, Bitcoin enjoys a “first-mover advantage”; this means that it has set most of the rules for the entire cryptocurrency market, and all subsequent cryptocurrencies have to abide by it. This is the case for all industries. Advantages for those who show up first.
When most people hear the word “cryptocurrency,” the first thing that comes to mind is Bitcoin. While many emerging cryptocurrencies have attempted to innovate or improve on Bitcoin’s technology, Bitcoin’s early advantages have allowed it to build a loyal user base and strong infrastructure. This advantage has helped it maintain its dominance as the crypto space continues to evolve.
Total supply is fixed
The supply of Bitcoin is limited to 21 million coins, making it a “deflationary asset.” Bitcoin’s scarcity will likely drive its value gradually upward as demand increases and remaining Bitcoin becomes more difficult to mine.
Just as gold’s trading price fluctuates as supply and demand changes, Bitcoin’s scarcity creates similar price dynamics. No other cryptocurrency has the same built-in scarcity, which is why Bitcoin is often called “digital gold.” This unique feature will continue to strengthen its dominant position.
Brand advantage
Bitcoin has strong brand recognition and trust. Bitcoin is the original cryptocurrency, a status that carries enormous influence. Since its creation in 2009, it has become the most trusted digital currency and is widely used in many countries, even competing with the US dollar and the euro. This recognition has made Bitcoin the first choice for new investors and institutions entering the crypto space.
Unlike emerging cryptocurrencies, Bitcoin no longer needs to prove its legitimacy. It has earned the trust of millions of people, and this brand power is difficult to surpass, giving Bitcoin a decisive advantage over the competition.
Endorsement and adoption by institutions
Bitcoin has experienced a massive wave of institutional adoption in recent years. Companies such as Tesla, Strategy and Block have included Bitcoin in their balance sheets, and central banks and financial institutions have also begun to provide Bitcoin-related services to customers.
The approval of the Bitcoin Spot Futures ETF further solidifies its position in the financial world. As more large companies adopt and legitimize Bitcoin, its position as the dominant cryptocurrency will become harder to shake.
Decentralization and security
Bitcoin’s decentralized network is one of its greatest strengths. Since there is no central authority controlling it, Bitcoin is resistant to censorship and manipulation.
Although Bitcoin’s Proof-of-Work (PoW) consensus mechanism consumes a lot of energy, its security and reliability have been widely verified. The Bitcoin network is supported by thousands of miners around the world, making it extremely difficult to be hacked or tampered with. Such decentralization and security give Bitcoin an advantage over newer, yet unproven cryptocurrencies.
Cryptocurrency market
Let the numbers speak
According to data from CoinMarketCap, as of September 26, 2024, Bitcoin’s current market capitalization is US$1.26 trillion, accounting for nearly 55% of the US$2.4 trillion cryptocurrency market. The last time it reached this level was in April 2021. The second place is Ethereum with only 315.4 billion U.S. dollars, and the third place is Tether with 119.3 billion U.S. dollars.
According to CompaniesMarketCap, as of September 26, 2024, Bitcoin’s current market value is US$1.26 trillion, making it the ninth largest asset in the world. Number one is gold, with a market capitalization of $18 trillion. Following closely are the stock listed companies: Apple, Microsoft, Nvidia, Amazon, Alphabet, Saudi Aramco, and Meta.
85,000 Bitcoin millionaires
As of September 10, 2024, multiple data show that the rapid expansion of the cryptocurrency market has caused a surge in the number of wealthy people in the currency circle. The number of wealthy people around the world holding more than US$1 million in cryptocurrency has increased by 95% in the past year. , an increase from 88,200 last year to 172,000.
Among them, the number of millionaires who simply hold Bitcoin has more than doubled to 85,000, showing that cryptocurrency is not only changing the way wealth is accumulated, but also reshaping the global wealth pattern. With the popularity of cryptocurrency, the number of global users has also increased significantly. Data shows that the number of global cryptocurrency users has reached 560 million, with an annual growth rate of nearly 50%.
Bitcoin’s main competitors
Since its launch in 2009, Bitcoin has been the “king” of cryptocurrencies. However, as the crypto world continues to evolve, Bitcoin faces competition from more technologically advanced cryptocurrencies such as Ethereum and Solana.
The trend is in favor of Bitcoin
Now, people are beginning to question whether Bitcoin can still maintain its leadership position. However, there are many signs that Bitcoin will continue to be one of the most influential cryptocurrencies and may even continue to dominate. Ethereum is currently going through a difficult period, with its trading price against Bitcoin at its lowest level in more than 40 months, according to IntoTheBlock data, showing that investors still prefer Bitcoin’s stability over Ethereum’s volatility and risk sex.
Conclusion
For the foreseeable future, Bitcoin will maintain its dominance in the cryptocurrency market.
Bitcoin’s brand power, limited supply, growing institutional adoption, security, and first-mover advantage all point to it remaining dominant for years to come. Despite fierce competition, these characteristics will give Bitcoin a unique and lasting advantage over other digital currencies.
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