Bitcoin has been outperforming other digital currencies lately, increasing its share of the broader market as prices climb.
The world’s largest cryptocurrency by market capitalization (market cap) reached $5,641.36 today on CoinMarketCap, its highest since November.
The digital asset later pulled back, trading at $5,473.03 by 13:34 UTC, additional CoinMarketCap data shows.
At this point, bitcoin was up 4.4% for the week, while several altcoins (cryptocurrencies other than bitcoin) were in the red.
Several market observers offered explanations as to why bitcoin has been outpacing other digital currencies.
Analyst: Bitcoin Crypto’s ‘Most Important Asset’
“BTC is still the most important asset in all of crypto,” said Jeff Dorman, chief investment officer of asset manager Arca.
John Todaro, director of digital currency research for TradeBlock, concurred, describing bitcoin as “most important asset in the digital currency space.”
“When it performs well, the best risk/reward is arguably to own Bitcoin over any other digital asset,” said Dorman.
“This doesn’t necessarily mean BTC’s returns will be higher, just that the probability weighted return is the highest given that BTC is so far ahead of any other digital asset in terms of adoption and use cases,” he explained.
Dorman spoke to the generalized bullishness cryptocurrencies experienced earlier this month.
“If you look back to early April, when BTC rose 25% in a day, every other digital asset rose as well,” he emphasized.
“But, since that day, BTC has remained well bid while every other asset has slowly begun to decline due to a rotation out of ‘altcoins’ and into BTC.”
Joe DiPasquale, CEO of cryptocurrency fund of hedge funds BitBull Capital, also weighed in.
“During a major rally, when Bitcoin is on the rise, there is a general move out of altcoins and into BTC,” he stated.
“Despite what USD prices show, all altcoins also have BTC pairs, and as BTC moves up, people holding altcoins see the BTC equivalent of their holdings decrease,” said DiPasquale.
He emphasized that traders only “move to altcoins” when bitcoin starts consolidating.
‘Altseason Is Over,’ Says Analyst
Mati Greenspan, senior market analyst for eToro, summed the situation up nicely.
“Altseason is over and the market is now consolidating back into Bitcoin,” he stated.