According to the St. Louis Fed, altcoins are harming Bitcoin’s price and its market dominance. In a recent report released by David Andolfatto and Andrew Spewak, they mention that altcoins could harm Bitcoin’s future growth.
The report reads as follows:
“While Bitcoin’s price is not likely to fall to zero, the prospect of a flood of Altcoins competing with Bitcoin in the wealth portfolios of investors islikely to place significant downward pressure on the purchasing power of all cryptocurrencies, including Bitcoin.”
If more virtual currencies are created but capital does not enter the market, Bitcoin’s value could continue to decrease. According to CoinMarketCap, Bitcoin’s dominance in the market increased in 2018 and during the last months, it remained stable between 50% and 55%. However, back in 2016, Bitcoin’s dominance was more than 85%.
Bitcoin has also experienced different hard forks such as Bitcoin Cash (BCH) or Bitcoin Gold (BTG), among others. These contingencies in the Bitcoin community have also played a negative role in Bitcoin’s price.
At the end of 2017 and the beginning of 2018, several new digital coins started to enter the market. This weakened Bitcoin’s relative position in the market. Furthermore, coins such as XRP and Ethereum (ETH) have also settled themselves in the cryptocurrency market. This is why Bitcoin, Ethereum and XRP are the three largest digital assets in the market.
Currently, Bitcoin’s market capitalization is $64 billion and each coin can be purchased for $3,665. Bitcoin’s market dominance is 52.4%. Furthermore, the number of digital currencies in the market is 2104, according to CoinMarketCap.