Altcoin season - why bitcoin is losing ground

Bitcoin’s share of both total cryptocurrency capitalization and transfers has tended to decrease recently. At first, there was a more active inflow to the second most capitalized Ethereum, which for a certain period was even able to take a fifth of the market, however, it also failed to hold the bar. Let’s examine why investors and traders prefer promising alternatives to market leaders.

Technical Reasons
Speaking of technical reasons, we should first of all mention a rise in the cost of transactions. It is especially visible during the movement of a small amount of value.

For example, if just a couple of years ago, $1,000 could be sent for a few tens of cents, and a little earlier, for free, now one transfer, regardless of the amount, can cost several tens of dollars.

Also, we should not forget about the floating nature of the commission in the first cryptocurrency. Thus, sometimes you have to pay more if the transaction has to go through as quickly as possible. All this makes bitcoin, and more recently Ethereum, less convenient tools to pay and move value.

The high transparency of the blockchain of the first cryptocurrency also discourages some investors who want to leave their capitals in silence. The low degree of privacy is especially evident in light of recent revelations by law enforcement agencies of a number of pyramid schemes and fraudulent companies. In the same way it is possible to track the investments of honest investors, which, in the context of the discussion of cryptocurrencies, will not please everyone.

Investment component
Here, there is an increase in the use of cryptocurrencies as a means of long-term investment. Investors increasingly see bitcoin as a way to preserve capital and as a means of hedging inflation risks.

We should not forget about the reputation of the leaders of the cryptocurrency market as non-polluting products. Not every investor is ready to take responsibility for maintaining an industry that worsens the state of nature.

Here we can also note another reason for choosing other coins to invest in – an expensive entry threshold to bitcoin. Not every investor is willing to invest a large amount in cryptocurrencies at once, preferring to diversify their portfolio, while not everyone is willing to entrust their coins to exchanges for safekeeping, preferring cold ways. Therefore, small investors choose alternative coins with high reliability.

Little room for trading
Based on the above, another problem, as strange as it may sound, is the lack of volatility of bitcoin. Although you can see quite strong jumps in one direction or another, but they occur less and less often. Traders accustomed to strong jumps have to look for new tools. For several years of the active existence of the cryptocurrency market, speculators have already developed certain strategies, which can be not only long, but also expensive to rebuild.

Also, it should not be forgotten that as the field of digital assets develops, it offers all new tools that not only have some technical innovations, but can also offer a special philosophical nature of the coin.

Thus, we can conclude that the leaders in capitalization are increasingly moving into the category of tools for the accumulation and preservation of capital. Alternative coins are increasingly coming to the forefront. Stablecoins, which are increasingly used in business, are not the last place. If we talk about classic cryptocurrencies, Litecoin and Dash can be singled out as having confirmed their viability. However, meme coins also found their niche, turning from industry community cryptocurrencies into quite a full-fledged financial instrument.