Does Bitcoin underperform compared to altcoins?

There are many comparisons between the first half of 2021 and 2017 in the crypto market. Bitcoin (Bitcoin) Set a record high, a new field of decentralized finance has emerged, and irreplaceable tokens have been recognized by countless celebrities.

But after the ecstasy of the first few months and the subsequent sell-off, BTC’s performance was much flatter.this Recent market sell-off The worries caused by the Evergrande crisis have intensified people’s worries. However, it cannot be ignored that many altcoins, especially platform tokens, have experienced impressive operations, and in some cases even bucked the trend.

The hope that a bull market may reappear in this halving cycle is still high. Should BTC holders worry about the underperformance of flagship assets?

2021 figures

From January to April, reaching an all-time high (ATH) of nearly $65,000, BTC rose by 113%. Based on current prices, the year-to-date (YTD) increase is about 45%.

In contrast, ether (Ethereum) From January to May, the ATH increased by 497%, and the year-to-date increase has exceeded 300%, although Recent assault.

However, even the impressive gains of ETH are nothing compared to competitors’ platform tokens. Cardano (Have)’S year-to-date growth is staggering, exceeding 1,000%, while Barely support Any actual activity. Solana’s SOL has risen by more than 8,000% since January, even dwarfing this figure.This is after exiting All-time high above $200It is worth mentioning that Polygon (MATIC), Avalanche (AVAX) and Terra (LUNA), all of which have experienced an impressive rally in 2021. CEO Stephen Gregory told Cointelegraph:

“In general, people are enthusiastic about Web 3.0, whether it is using ETH to power the metaverse, or using SOL to speed up transaction time, or whatever the future of ADA. People believe that holding the first layer of agreement is an important value in the future. Choice. The momentum and progress of asset classes that invest in reliable technology and follow real-world use cases appear to be cautious.”

Why do altcoins outperform BTC?

On the surface, these numbers do seem to indicate that BTC is performing poorly compared to other tokens. One factor that can explain this is the law of diminishing returns. BTC is the oldest asset, twice as much as Ethereum. Although Bitcoin provides jaw-dropping returns over its life cycle—making early adopters billionaires—is it possible for this flagship asset to continue to provide three or four-digit returns over time ? Given that Bitcoin’s entire economic model is based on the principle of diminishing returns, block rewards are halved every four years or so, which seems reasonable.

In addition, as Cointelegraph has Reported beforeWith the influx of more and more investors and institutions, Bitcoin has begun to reflect other assets.We can Damping Bitcoin fluctuations over time.

It can be said that the only reason for the continued growth of the market is that investors are constantly looking for new valuable assets. Therefore, although the return of BTC seems to be low, it is not surprising that investors are interested in more volatile assets to profit from price changes.

But this raises other questions: Is there a risk of creating a negative self-actualization cycle from BTC? As investors turn to other assets for huge returns, will BTC inevitably become less attractive?

Or, if we dare to imagine, does the current appetite for platform tokens indicate that investors’ sentiment towards Bitcoin is being attracted by the argument of “no intrinsic value”? After all, stronger fundamentals and potential for adoption may be a big selling point of platform tokens relative to Bitcoin.

Micha Benoliel, co-founder and CEO of Nodle, a decentralized Internet of Things network, believes that the platform token has a bright future, but it may not be at the expense of BTC. He told Cointelegraph:

“I think the market has only just begun to understand the value of the blockchain ecosystem and services. This is why altcoins perform so well. Bitcoin is more like a store of value. It is on a development track and is becoming a This is an encrypted asset class that is less risky and suitable for people with long-term investment strategies.”

Is 100,000 USD of Bitcoin still a reality?

From another perspective, even though Bitcoin’s returns are declining compared to its historical highs, so far, returns continue to exceed other assets such as stocks and gold. At the current rate of decline, BTC will continue to provide excellent performance for a considerable period of time in the future. Therefore, the outflow seems unlikely to be imminent. Daniele Bernardi, CEO of the investment company Diaman Group, told Cointelegraph:

“Of course, in terms of percentages, Bitcoin seems to be underperforming compared to small and medium-sized coins. But don’t forget the huge difference in capitalization. If the price of BTC rises by 10%, it will increase the market value by $80 billion. For example, if With a 100% increase in Solana, the actual market value will increase by $40 billion. For this reason, I see no reason to doubt Bitcoin or its status as a market-leading asset.”

In terms of the bull market trajectory, it is also worth noting that in 2017, Bitcoin rose by 1,900% between January and December. However, until 2021, it has only increased by about 450%. If the price does follow the same pattern, it will put us on the track of the year-end BTC price of approximately $138,000.

This estimate is surprisingly close to the end-of-year price of $135,000 predicted by the inventory-to-flow (S2F) model, which is still the most accurate prediction of the bitcoin price.In fact, the closing price of BTC in August is, give or accept, exactly the same Expected It was launched in June by S2F creator PlanB, and it may follow suit in September.

Bitcoin gains a foothold

These figures show that in successive bull market cycles, BTC’s returns have indeed decreased over time. But considering Bitcoin’s economic model, this is not surprising to anyone. Cointelegraph writer and full-time trader Michaël van de Poppe agreed, and he told Cointelegraph:

“Investors shouldn’t worry. In fact, it is a natural habit for the market to slow down and prolong the cycle. This is something we will see more often in the future, and it will actually open the door for more investors. Bitcoin’s performance and The fewer daily changes, the better as an asset in your portfolio.”

However, declining returns should not detract from the fact that Bitcoin’s performance is in line with the most optimistic predictions anyway. According to Bybit Communications Director Igneus Terrenus, BTC is still the currency of choice for newcomers (institutions or individuals) entering the field so far. He told Cointelegraph:

“Bitcoin is still the best investment-grade encrypted asset for institutional investors. A relatively more stable range model may actually help Bitcoin as an alternative to gold and add momentum to its long-term rise. When it shrinks to 5 years or In 10 years-a vision familiar to whales and institutional investors-Bitcoin returns are more than anything else.”

If BTC has been languishing in a long-term bear market, it is impossible to say whether any recent platform token rebound will happen, because the currency Tends to flow Get down from BTC.

More importantly, these models show that there are still good reasons to believe that the price of BTC will exceed six figures by the end of the year. Despite the increasing demand for platform tokens, Gregory of agreed. He told Cointelegraph, “BTC has outperformed the market, but it is currently hindered by Wall Street macro market trends and events. However, historically, the fourth quarter was the strongest for BTC, and it is likely to be before the end of 2021. History will repeat itself.”

Nevertheless, although BTC is not in danger of losing its status as the flagship asset of cryptocurrencies, it is undeniable that the soaring altcoins now provide greater opportunities for those who believe they can seize the market opportunity.