Almost six months after their previous peaks, Bitcoin & Ethereum have reached new all-time highs (ATHs). In fact, ETH continues to pile one with new ATHs as we speak — so far, reaching $4670 after overtaking the previous ATH of $4,370 charted on May 12 of this year. Bitcoin, on the other hand, reached its new ATH of $66,981 on October 29 and is currently trading around $62.9k after charting the previous ATH of $64.8k on April 14 after the Coinbase IPO
Although the demand for the pioneering cryptocurrency remains robust, its smart contract peers like Ethereum and other Layer 1 solutions are riding high with the more innovative use cases. The latter seems to have much more room to grow in this sector and give tough competition to Bitcoin in the long run. The primary and most important use case for BTC remains its scarcity and digital store of value.
This is has served the premier digital currency well, but this might not be the case always as more innovative & diverse use cases emerge for other cryptocurrencies. The recent approval by the U.S SEC for a Bitcoin ETF was another shot in the arm for the crypto kingpin, but BTC needs to come out of the trading & investing only phase if it has to compete with its emerging competitors.
The shape of Web 3.0 is becoming clearer and attracting ever more assets. According to Chainalysis Market Intel, A further 4 million Ethereum have flooded into DeFi since mid-April, bringing the total to 17.6 million Ethereum, 15% of the total supply — all positive developments for the Cryptos, as they move towards innovative avenues.
Figure 1
Coming back to Large investors putting their money in Bitcoin has kept the top digital coin going when it comes to keeping the dominance over the crypto market. As the chart above (Figure 1) shows, investors, those who have held at least 1,000 bitcoin, now hold more bitcoin than they ever have done in 2021 — they increased their holdings rapidly at the start of the year, adding 185k bitcoin to their holdings by the start of February.
They sold and bought through price cycles. Then, in the week of 25 October, they added 142k bitcoin to their holdings. Needless to say, that trading/investment is seen as the biggest use case for Bitcoin — seen as digital gold, institutions are perhaps making a long-term bet on the primary crypto asset. Ethereum and other layer1 platforms have a sophistication edge over BTC.
While Bitcoin may continue to benefit from its pioneering status in cryptos, future gains might be dependent on how it evolves and innovates. With the abundance of promising innovative Alt. coins on the horizon, it is not the only way to gain exposure to cryptos anymore. Having said that, we have seen some attempts to integrate Bitcoin into the expanding Cryptoverse.
One example is the Wrapped Bitcoin (WBTC) — an equivalent ERC-20 token that can be used to tap into the DeFi landscape. Currently, about 230k Bitcoin is wrapped, but it is a tedious process involving a centralized third party. For wider adoption, however, a decentralized way of wrapping bitcoin needs to emerge. This takes us back to the previous question — Bitcoin needs to innovate. For now, though, it remains the king of cryptos.
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