(Kitco News) Bitcoin could emerge from this crypto winter with greater market share as investors return to the world’s largest cryptocurrency from other altcoins, according to OSL Managing Director and Head of Americas Fernando Martinez.
Bitcoin is already the most recognizable cryptocurrency in the space. But following this bear market, it can gain even more dominance.
“We have seen a big rotation from altcoins to Bitcoin. Right now, Bitcoin is trading at over 40% market dominance. And we expect that to continue to rise as we embrace this bear market “Martinez told Kitco News in a recent interview.
June was a terrible month for Bitcoin, which plunged 40% and ended the month below $20,000. Since, Bitcoin stabilized and broke above $23,000. However, the bear market is still in place as investors shift from inflation to recession fears and more contagion risks in the crypto space.
“A lot of active Bitcoin traders trade the ranges. On altcoins, they stay away because they’re not as predictable as Bitcoin itself,” Martinez described.
In this environment, high inflation figures no longer surprise investors. This is why Bitcoin is well positioned for the crypto winter – its ability to eventually become a reserve asset and end its correlation with risky assets.
This correlation is already falling, Martinez pointed out. “If you take a look at the correlation between Bitcoin and the NASDAQ 100, it was at all-time highs in February. Right now it’s not as predictable anymore and it will continue to decouple. But for protocols, which are the higher beta type of assets, there will be risk-on/risk-off,” he said.
When analyzing trading activity, it is important to separate Bitcoin from protocols and applications.
“These three categories trade extremely differently. And you can’t think they have the same risk. For example, the DeFi space saw a total loss of interest. In November, DeFi had a total value locked $150 billion. Right now, the total value locked up is $30 billion,” he said.
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However, decoupling Bitcoin from risky assets will take time. Martinez noted that OSL’s recent survey revealed that institutional clients see a greater chance of Bitcoin decoupling than the retail side.
“Only time will allow Bitcoin to mature. However, right now the market sentiment is completely risk-free,” he said.
In terms of long-term price direction, Martinez is bullish. “Over the next five years, we can see Bitcoin as one of the top five currencies in the world,” he said.
Martinez is also very optimistic about Ethereum, noting that it is the most powerful protocol. “It’s survived multiple cycles. It’s been massively adopted. There are some constraints they need to address with the merger. But we’re extremely optimistic there,” he said. “Other than that, the other protocols still have a lot to prove.”
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