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The trend that began several weeks ago has once again accelerated in recent days, that of an altcoin season illustrated by a decline in the dominance of bitcoin over the total capitalization of the cryptocurrency market. The latter now falls well below 50%, hitting exactly 45% as of this writing. This level has not been seen since 2018.
Ethereum is partly responsible for this rise in altcoins, with its own dominance now reaching 15%. It was an absolutely breathtaking week for the latter. The ratio of one ETH to bitcoin rose from 0.05 to 0.06 in the blink of an eye, a sudden rise of 20%. The asset's US dollar price hit an all-time high, hitting $ 3,500 a piece. While bitcoin lost 3.5% of its value over the week ending yesterday, Ethereum improved by 21%. The trend is so strong that the talk of "flippening", the idea where Ethereum outperforms bitcoin in terms of capitalization, has returned to the forefront this week. The latter almost happened in June 2017, with market dominance reaching 37% for BTC versus 31% for ETH. If we are still far from these thresholds, is this where the trend is leading us?
One thing is certain, with the Rivemont crypto fund being approximately 70% invested in ETH, it was a particularly positive week for investors.
The creator of Ethereum, the Russo-Canadian Vitalik Buterin, has by the same token become the most recent billionaire in cryptocurrency. The latter has this sum in a single ETH wallet. Buterin had sold some ETH in August 2020, but he has not repeated the experience since. The 27-year-old programmer's main wallet contains 333,520 ETH. He would also have a few secondary portfolios.
Revenons sur cette tendance des altcoins versus le bitcoin. Si le passe n’est jamais garant du futur, force est de constater que plusieurs similitudes se dressent entre le marche haussier de 2017 et celui que nous connaissons actuellement. Si on regarde la tendance a long terme de la capitalisation des differentes cryptomonnaies, on constate que la bitcoin avait aussi consolide pendant plusieurs mois alors que les altcoins progressaient. Sa dominance est passee de plus de 90 % a 37% lors de ce cycle precedent. Si nous devions repeter ce dernier, le sommet initial etant plus bas, on pourrait pretendre a une dominance sous les 30%. On constate aussi que cette dominance du bitcoin est passee au sud d’un support tenu depuis plusieurs annees.
We also note that the capitalization of altcoins has just passed a historic high. The last time this happened in 2017 (surpassing the peak of 2014), a 27,000% increase followed. While we certainly do not go so far as to say that this is what the markets will expect, nonetheless these indicators tend to suggest that this advance in altcoins may only be just beginning in the current bull cycle.
If you had told us that this weekly letter would be reviewed by DOGE in the past, we probably would have brushed it aside, smirking. Yet today it is impossible to ignore the inconceivable growth in popularity of this joke-based cryptocurrency. The price of a DOGE was $ 0.06 on April 5, while it is currently $ 0.65. DOGE topped XRP as the 4th largest cap virtual currency, reaching $ 85 billion. With 1,000% payouts in a month, even if the initial idea is just a joke, the payoff for some is real. We have mentioned some red flags in our most recent communication and could list them in full. We could recall that DOGE is a fork of a fork of a fork (bitcoin to litecoin to Luckycoin to DOGE) or that its possession is dangerously centralized, with more than 40% of all tokens in just ten wallets. In fact, all of the fundamental logic behind this currency is questionable, at best. However, to dwell on these elements does a disservice to understanding a potentially larger phenomenon and even the intrinsic nature of cryptocurrencies, namely the network effect.
Tyler Winklevoss sums up DOGE's value proposition admirably in his Gemini exchange statement yesterday, as the latter adds the asset to the tradable assets:
“Dogecoin is the people's money. She's organic, irreverent, and fun. It is not imposed on us by a government or some other central authority, it is chosen by us, for us - by the people, for the people. Wow.
For many, the idea of ??an emerging currency that is not imposed by fiat is difficult to understand. We are used to being told what money is. For most of our lives, paternalistic money is all we've known ... down to Bitcoin.
Dogecoin continues Bitcoin's tradition of returning control of money to the people. Yes, it is a meme currency, but all currency is a meme. And all money is both an idea and a matter of faith or belief in it. During the multi-millennial history of silver, the majority of silver (be it seashells, pearls, precious metals, etc.) has been what we the people say and believe it to be. is.
Dogecoin is the perfect vehicle to lay bare this fundamental truth about money. And in serving this purpose, DOGE has a legitimate right to some value. It reflects the true history and nature of money. He overturns the idea that money is something that is emitted by an authority - a vanity - on his head. They say there is some truth to every joke. The value of Dogecoin is its punchline. ”
This is the heart of the idea. Is DOGE the best technology, an ambitious, developed, innovative project? Not the least bit in the world. If an expert had to choose the best cryptocurrency to adopt at the transactional level, DOGE would be very, very far down the list. But that's all. This is not for the experts to say. Cryptocurrency is a P2P principle. It’s the community that adopts it that creates its value. The more a network is adopted, the more its value multiplies. This is Metcalfe's Law being demonstrated live in front of our eyes.
Now, we must also show caution and objectivity. Are we witnessing a monetary revolution or a speculative madness? Are the people who are rushing to DOGE right now doing it for philosophical reasons or for quick profit? Are exchanges taking advantage of this madness to spark dangerous mirages for novice investors? Most certainly. If you are used to this weekly newsletter, you already know which way we are leaning. It is caution and not exuberance that we invite. The fact remains that the observed phenomenon is no stranger to the very concept of cryptocurrencies. The idea is not to take sides, but to understand what is happening in all facets. Regardless, the rise of DOGE is absolutely captivating.
Let's conclude this update with a few words about bitcoin, still a market leader despite current trends. The latter remains in a zone of great uncertainty, on either side of its 50-day moving average. He lost it heavily on Tuesday following the words of Janet Ellen, Joe Biden's treasury secretary. The latter said at the time that a hike in interest rates was possibly inevitable in order to avoid overheating the economy. Obviously, such a rise would mean lower inflation, and therefore a less important role for bitcoin at the macroeconomic level. The latter has since reconsidered his remarks. Coincidentally or not, the price is rebounding strongly today, going from a floor price of $ 52,900 to over $ 57,000 apiece at the time of this writing. In short, the logic that stood out in recent weeks still stands today.
The fund’s capital exposure, as of April 30, 2021, was 63% Ethereum, 31% Bitcoin, 3% Litecoin, 2% ZCash and 1% cash.
This article is brought to you by Fonds Rivemont. The Rivemont Crypto Fund is the first and only actively managed cryptocurrency fund in Canada. RRSP and TFSA eligible. Qualified investors can learn more here.
