BTC dominance. Will Ethereum leave the 2-nd line of the ranking?
Updated
Bitcoin dominance is the reason why you will lose by buying altcoins now!
Many believe that ETH market cap can exceed BTC market cap. However, history shows us the opposite picture, that Ethereum will drop from the second place down, the question is just when...
A significant event that the market has not seen for a long time will soon take place, when Bitcoin shows good growth, and at this moment many altcoins will be falling in relation to USD. It will be very unpleasant to observe this with a large portfolio of altcoins.
Judging by everything, this will be the day when the court announces the verdict on the Ripple and XRP case. As the major exchanges introduce KYC before June 21, very soon XRP and many altcoin's will start being called unregistered securities, after which liquidity will flow even more actively from altcoins to Bitcoin.
I want to start with my list of TOP 10 trading recommendations, which has been around for a couple of years, and all this time there have been different situations in the market, but it remains unchanged.
1. The size of investments in cryptocurrencies is calculated from the possibility of a 100% loss. With high probability, 90% of cryptocurrencies will eventually disappear.
2. Avoid various pump groups. They are created to make money off you.
3. Everyone makes trading mistakes. It is important to learn not to make the same mistake twice.
4. Try not to trade against the trend. Trading is about identifying the trend and partially "riding" it. The market is cyclical and each cycle has phases. Learn to distinguish market phases.
5. Do not buy a coin if you know nothing about it or are unsure of your knowledge. This is very important in the current market phase.
6. Do not be afraid of market crashes - there lies the opportunity to earn well.
7. Do not "marry" altcoins, especially in the bear market phase.
8. You can make more than 50% wrong trades and still remain profitable. The main thing is to manage risks correctly.
9. Don't fuss. Imagine yourself as a hunter - save your ammunition (USD or BTC) for the big game.
10. If you have made a lot of money, lock in your profit or part of the profit, take a rest and do nothing for a week, read a book on market psychology.
All my major investment mistakes were made due to a strong involvement in the technologies that altcoins offer. I believed in the great potential of certain, quite fundamental projects, but in many market phases they did not show the expected result, and Bitcoin often left everyone behind. For the cryptocurrency market, the word "altseason" is now an integral part, from the point of view of global marketing. But altcoins come and go, while Bitcoin remains, I think it will always be that way. I'm not a fan of Bitcoin, I like other mathematical models for decentralized finance, but it's very important to understand the different phases in the market and consider all risks.
If you study history well, only gold has always been in the immutable and first place in the world financial system ranking. Starting from the 14th century and the Portuguese real, the sixth cycle of world currency dominance change is underway. Perhaps many of us will have the opportunity to witness how such a cycle change will occur by transitioning to the dominance of the Chinese yuan in global fiat transactions.
We are now in the ninth year when Ethereum is in second place in the cryptocurrency market cap ranking. If we project this onto cryptocurrencies, history shows us that Bitcoin will remain like gold, while someone else will take Ethereum's place. I would not have thought about this before, but the current news agenda regarding cryptocurrency market regulation has changed everything.
Are there any fundamental grounds for such a change? Previously, the SEC unofficially stated that ETH is not considered a security. But there were also words from the SEC that after Ethereum's transition to the POS protocol, this relationship might change, although these words are not remembered by anyone, perhaps deliberately for now. And here the very scheme of selling ETH coins through ICO will greatly worry the SEC, because if ETH is recognized as a "commodity", then many other projects will fit this template and use ETH as an example to justify themselves before the SEC. I think the SEC does not need such problems, and in the end, they will simply have to recognize ETH as a security. The introduction of the EIP-1559 update to Ethereum further increases this likelihood, as no one burns a "commodity" to give it additional value. We recall the history with the Howey Test and oranges. Let's destroy some of the collected oranges, add value, so other people would buy them at a higher price? In fact, the top cryptocurrency exchanges already in 2019 created a test of 36 questions, after answering which a cryptocurrency is rated on a 5-point system for the likelihood NOT to be called a security.
All exchanges know what will happen next, so they gradually introduce KYC. The Hotbit exchange even announced a suspension of operations, citing worsening operating conditions due to regulation, and asked users to withdraw their remaining assets by June 21.
Unlike his predecessor, the current SEC Chairman Gary Gensler has not expressed a clear position on the status of Ethereum. He previously noted that he considers most cryptocurrencies, with the exception of Bitcoin, as securities — but despite this, the Commission did not include ETH in the recently published list of assets falling under this classification.
Recently, JPMorgan expressed the opinion that the U.S. Congress may recognize Ethereum as a new class of assets, and it could take an intermediate position between a commodity and a security. According to the company's strategist Nikolaos Panigirtzoglou, in this case, the financial regulator will have far fewer requirements for the second largest cryptocurrency by capitalization. If such statements were made, it is likely that questions will ultimately be posed to ETH as well.
Why is such a scenario realistic? Over these 9 years of Ethereum's dominance among altcoins, other strong blockchains have emerged that may overtake it in popularity over time, but no one will replace Bitcoin. From my point of view, I see one such project, but that's the topic of another article. For now, let's call such an event a "Black Swan" and it won't be instantaneous, it will be a lengthy transitional process with a lot of speculation and contenders for the top spots in the market capitalization rankings.
Let's say the SEC starts a case against ETH, what are the consequences? The money will flow into Bitcoin in advance, then Ethereum will start having problems. It may even end with Vitalik Buterin officially renouncing his brainchild. This would add decentralization to ETH and it would no longer have an obvious leader who can influence the market with Twitter publications. Moreover, Buterin hinted at such a departure a couple of times, which increases the likelihood.
There's another interesting point. The first NFT from the CryptoPunks collection that was transferred to the Bitcoin blockchain from the Ethereum network through burning has been recorded! On June 18th, address 0xBc…0a71 spent 54.49 ETH to purchase punk number 8611, then sent it to the burn address Null: 0x00…dEaD and reincarnated it as bitcoin record number 12,456,749. For conspiracy theorists, this is definitely some sort of sign.
Everything that's happening in the news headlines today with the word "SEC" is something I expected last year. I've been studying cryptocurrency regulation since 2019, and until today, I've tried to understand what awaits us with its arrival. Apparently, the regulation has been delayed because the transition of ETH to POS has also been severely delayed. Also, the FedNow payment system from the Federal Reserve is coming out in July, hence the digital dollar (CBDC). This is the main answer as to why there is no further delay.
What will follow when digital assets are divided into securities, digital currencies, and utility tokens? This is the most interesting part! Once all laws and amendments regarding regulation are implemented and a status for each digital asset is determined, in my opinion, the only way to enter regulated markets will be on the condition that the owner is listed for each blockchain wallet address through KYC. No one is talking about this, maybe they're not even thinking about it, but it's likely to be just like this. Every security must have an KYC owner!
Such uncertainties will hinder new investments, and the market will begin to restructure or adapt to new conditions. The altcoin market will suffer the most. While everyone argues whether ETH, BNB, and XRP are securities or commodities, I want to remind you that Bitcoin has officially been recognized as a means of payment in El Salvador = it has officially acquired the status of "digital currency" or "money".
There is also good news. If you fully understand what regulators are currently thinking, you can timely place a bet on digital assets that will be recognized as utilities and have future prospects, they will not be of interest to regulators. But there are still many risks here as this will trigger another bear market phase from the fall.
Ethereum has one trump card. I've studied how the split of the ETH and ETC networks happened, and from the point of view of all processes, the original Ethereum, the coins that were sold in the ICO – it is precisely Ethereum Classic (ETC). That is, today's ETH is a fork from ETC, which everyone got for free, or mined later through mining or staking in the ETH 2.0 network. From this point of view, the new ETHW fork may show growth on all upcoming speculations. Today, the capitalization of ETHW is less than $200 million. Perhaps there will be a trial, and at some stage fact, about ETH is a fork from ETC, may emerge from the defense. Then all other projects will immediately start releasing forks or Airdrop their main networks to new networks, which Matic has already announced. In the medium term, this can be a positive for the altcoin market, as it will give a new impulse to the mechanism to print money out of thin air, I can't call it other words. Honestly, I think in the long term the story with forks and Airdrops is not crowned with great success, as I'm waiting for the "Black Swan", which will begin to change the paradigm established today. We watch and prepare to make money on speculations.
Since February, in my publications, I often refer to the fact that Bitcoin's dominance should show a strong trend, but there were few reasons for this. Now they are more obvious, and I want to show the main points on the chart, when and how to start looking at altcoins with the least risks, wait until the "regulation" storm passes and predominantly stay in Bitcoin.
I don't think there's any point in spreading out and looking for prospects in POW coins like Litecoin or Ethereum Classic, etc. My trading experience has shown that when dominance starts to pick up a trend, almost all altcoins deflate and it's optimal to stay in Bitcoin. Soon, money will start flowing more actively from altcoins to BTC and I think we will see a rise to 28,000-30,000 dollars this summer. Only after such a rise will dominance reach the first designated level of 55.7% for selective purchases and from there it will already be necessary to analyze who will "survive" in place.
Many believe that ETH market cap can exceed BTC market cap. However, history shows us the opposite picture, that Ethereum will drop from the second place down, the question is just when...
A significant event that the market has not seen for a long time will soon take place, when Bitcoin shows good growth, and at this moment many altcoins will be falling in relation to USD. It will be very unpleasant to observe this with a large portfolio of altcoins.
Judging by everything, this will be the day when the court announces the verdict on the Ripple and XRP case. As the major exchanges introduce KYC before June 21, very soon XRP and many altcoin's will start being called unregistered securities, after which liquidity will flow even more actively from altcoins to Bitcoin.
I want to start with my list of TOP 10 trading recommendations, which has been around for a couple of years, and all this time there have been different situations in the market, but it remains unchanged.
1. The size of investments in cryptocurrencies is calculated from the possibility of a 100% loss. With high probability, 90% of cryptocurrencies will eventually disappear.
2. Avoid various pump groups. They are created to make money off you.
3. Everyone makes trading mistakes. It is important to learn not to make the same mistake twice.
4. Try not to trade against the trend. Trading is about identifying the trend and partially "riding" it. The market is cyclical and each cycle has phases. Learn to distinguish market phases.
5. Do not buy a coin if you know nothing about it or are unsure of your knowledge. This is very important in the current market phase.
6. Do not be afraid of market crashes - there lies the opportunity to earn well.
7. Do not "marry" altcoins, especially in the bear market phase.
8. You can make more than 50% wrong trades and still remain profitable. The main thing is to manage risks correctly.
9. Don't fuss. Imagine yourself as a hunter - save your ammunition (USD or BTC) for the big game.
10. If you have made a lot of money, lock in your profit or part of the profit, take a rest and do nothing for a week, read a book on market psychology.
All my major investment mistakes were made due to a strong involvement in the technologies that altcoins offer. I believed in the great potential of certain, quite fundamental projects, but in many market phases they did not show the expected result, and Bitcoin often left everyone behind. For the cryptocurrency market, the word "altseason" is now an integral part, from the point of view of global marketing. But altcoins come and go, while Bitcoin remains, I think it will always be that way. I'm not a fan of Bitcoin, I like other mathematical models for decentralized finance, but it's very important to understand the different phases in the market and consider all risks.
If you study history well, only gold has always been in the immutable and first place in the world financial system ranking. Starting from the 14th century and the Portuguese real, the sixth cycle of world currency dominance change is underway. Perhaps many of us will have the opportunity to witness how such a cycle change will occur by transitioning to the dominance of the Chinese yuan in global fiat transactions.
We are now in the ninth year when Ethereum is in second place in the cryptocurrency market cap ranking. If we project this onto cryptocurrencies, history shows us that Bitcoin will remain like gold, while someone else will take Ethereum's place. I would not have thought about this before, but the current news agenda regarding cryptocurrency market regulation has changed everything.
Are there any fundamental grounds for such a change? Previously, the SEC unofficially stated that ETH is not considered a security. But there were also words from the SEC that after Ethereum's transition to the POS protocol, this relationship might change, although these words are not remembered by anyone, perhaps deliberately for now. And here the very scheme of selling ETH coins through ICO will greatly worry the SEC, because if ETH is recognized as a "commodity", then many other projects will fit this template and use ETH as an example to justify themselves before the SEC. I think the SEC does not need such problems, and in the end, they will simply have to recognize ETH as a security. The introduction of the EIP-1559 update to Ethereum further increases this likelihood, as no one burns a "commodity" to give it additional value. We recall the history with the Howey Test and oranges. Let's destroy some of the collected oranges, add value, so other people would buy them at a higher price? In fact, the top cryptocurrency exchanges already in 2019 created a test of 36 questions, after answering which a cryptocurrency is rated on a 5-point system for the likelihood NOT to be called a security.
All exchanges know what will happen next, so they gradually introduce KYC. The Hotbit exchange even announced a suspension of operations, citing worsening operating conditions due to regulation, and asked users to withdraw their remaining assets by June 21.
Unlike his predecessor, the current SEC Chairman Gary Gensler has not expressed a clear position on the status of Ethereum. He previously noted that he considers most cryptocurrencies, with the exception of Bitcoin, as securities — but despite this, the Commission did not include ETH in the recently published list of assets falling under this classification.
Recently, JPMorgan expressed the opinion that the U.S. Congress may recognize Ethereum as a new class of assets, and it could take an intermediate position between a commodity and a security. According to the company's strategist Nikolaos Panigirtzoglou, in this case, the financial regulator will have far fewer requirements for the second largest cryptocurrency by capitalization. If such statements were made, it is likely that questions will ultimately be posed to ETH as well.
Why is such a scenario realistic? Over these 9 years of Ethereum's dominance among altcoins, other strong blockchains have emerged that may overtake it in popularity over time, but no one will replace Bitcoin. From my point of view, I see one such project, but that's the topic of another article. For now, let's call such an event a "Black Swan" and it won't be instantaneous, it will be a lengthy transitional process with a lot of speculation and contenders for the top spots in the market capitalization rankings.
Let's say the SEC starts a case against ETH, what are the consequences? The money will flow into Bitcoin in advance, then Ethereum will start having problems. It may even end with Vitalik Buterin officially renouncing his brainchild. This would add decentralization to ETH and it would no longer have an obvious leader who can influence the market with Twitter publications. Moreover, Buterin hinted at such a departure a couple of times, which increases the likelihood.
There's another interesting point. The first NFT from the CryptoPunks collection that was transferred to the Bitcoin blockchain from the Ethereum network through burning has been recorded! On June 18th, address 0xBc…0a71 spent 54.49 ETH to purchase punk number 8611, then sent it to the burn address Null: 0x00…dEaD and reincarnated it as bitcoin record number 12,456,749. For conspiracy theorists, this is definitely some sort of sign.
Everything that's happening in the news headlines today with the word "SEC" is something I expected last year. I've been studying cryptocurrency regulation since 2019, and until today, I've tried to understand what awaits us with its arrival. Apparently, the regulation has been delayed because the transition of ETH to POS has also been severely delayed. Also, the FedNow payment system from the Federal Reserve is coming out in July, hence the digital dollar (CBDC). This is the main answer as to why there is no further delay.
What will follow when digital assets are divided into securities, digital currencies, and utility tokens? This is the most interesting part! Once all laws and amendments regarding regulation are implemented and a status for each digital asset is determined, in my opinion, the only way to enter regulated markets will be on the condition that the owner is listed for each blockchain wallet address through KYC. No one is talking about this, maybe they're not even thinking about it, but it's likely to be just like this. Every security must have an KYC owner!
Such uncertainties will hinder new investments, and the market will begin to restructure or adapt to new conditions. The altcoin market will suffer the most. While everyone argues whether ETH, BNB, and XRP are securities or commodities, I want to remind you that Bitcoin has officially been recognized as a means of payment in El Salvador = it has officially acquired the status of "digital currency" or "money".
There is also good news. If you fully understand what regulators are currently thinking, you can timely place a bet on digital assets that will be recognized as utilities and have future prospects, they will not be of interest to regulators. But there are still many risks here as this will trigger another bear market phase from the fall.
Ethereum has one trump card. I've studied how the split of the ETH and ETC networks happened, and from the point of view of all processes, the original Ethereum, the coins that were sold in the ICO – it is precisely Ethereum Classic (ETC). That is, today's ETH is a fork from ETC, which everyone got for free, or mined later through mining or staking in the ETH 2.0 network. From this point of view, the new ETHW fork may show growth on all upcoming speculations. Today, the capitalization of ETHW is less than $200 million. Perhaps there will be a trial, and at some stage fact, about ETH is a fork from ETC, may emerge from the defense. Then all other projects will immediately start releasing forks or Airdrop their main networks to new networks, which Matic has already announced. In the medium term, this can be a positive for the altcoin market, as it will give a new impulse to the mechanism to print money out of thin air, I can't call it other words. Honestly, I think in the long term the story with forks and Airdrops is not crowned with great success, as I'm waiting for the "Black Swan", which will begin to change the paradigm established today. We watch and prepare to make money on speculations.
Since February, in my publications, I often refer to the fact that Bitcoin's dominance should show a strong trend, but there were few reasons for this. Now they are more obvious, and I want to show the main points on the chart, when and how to start looking at altcoins with the least risks, wait until the "regulation" storm passes and predominantly stay in Bitcoin.
I don't think there's any point in spreading out and looking for prospects in POW coins like Litecoin or Ethereum Classic, etc. My trading experience has shown that when dominance starts to pick up a trend, almost all altcoins deflate and it's optimal to stay in Bitcoin. Soon, money will start flowing more actively from altcoins to BTC and I think we will see a rise to 28,000-30,000 dollars this summer. Only after such a rise will dominance reach the first designated level of 55.7% for selective purchases and from there it will already be necessary to analyze who will "survive" in place.
Note
Coinbase, Kraken, Circle Internet Financial, and Bittrex, back in 2019, developed a system to rate which cryptocurrencies are likely to be securities.In this Crypto Rating Council (CRC rating) system, you have to take a test of 36 questions and each answer is given a different score. Earlier the data on all tested cryptocurrencies was in public access on the Cryptoratingcouncil site, but now all the data is in private access, you have to write a request. The last time the data was publicly displayed was around 2021. A picture of this test from CryptoRank is available today.
The lower the score, the less likely you are to get a "security" label. Since the data is old, the coins listed here are not from the current TOP 20 ranking, no DOGE and no new favorites. In the lowest risk area on the same line as BTC are: DAI, ZEN, LTC, XMR, USDC.
❗️ XRP got the worst score here, that is almost 99% securities. And it's the only one there with such a derogatory rating.
💡 The latest SEC lists DASH cryptocurrency as an unregistered security. ETH and DASH are rated the same here.
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