Bitcoin losing market dominance in user base to altcoins even as global crypto users surge to 221M
Bitcoin’s dominance as the biggest cryptocurrency in terms of its number of holders is likely under threat, courtesy of new altcoins. The market share of Bitcoin owners in global crypto owners has declined from 67 per cent in January 2021 to 51 per cent in June 2021, thanks to different new altcoins that have grown from 20 per cent to 38 per cent during the said period, according to a report by Hong Kong-based payments and cryptocurrency platform Crypto.com. Bitcoin’s user base during February and March stood at 65 per cent and 63 per cent in April before it slipped to 53 per cent in May this year. The altcoins have also been eating the market share of Ethereum that narrowed from 13 per cent in January to 10 per cent in June.
“When checking the composition of crypto owners, we found that Bitcoin and Ethereum were losing their market shares. New challengers like Proof-of-Stake protocols and meme tokens showed great potential in May, especially after Bitcoin mining came under more scrutiny,” the report titled Measuring Global Crypto Users: A Study to Measure Market Size Using On-Chain Metrics noted. Altcoin adoption particularly in May had led to a massive surge in crypto users from 143 million at the end of April to 221 million as of June, likely because of the influx of new users who were keen in coins such as Shiba Token and Dogecoin, etc.
However, the number of global crypto users had doubled in only four months from 100 million to 200 million vis-a-vis nine months taken for the user base to grow from 65 million in May last year and over 66 million at the end of that month to 100 million. In May 2021, the crypto users had surpassed 200 million and reached 221 million in June 2021. According to the report, January, February, and April were exceptionally strong months with a growth rate of 15.7 per cent, 18.1 per cent, and 10.1 per cent respectively, driven by Bitcoin’s stellar performance. However, May was also extraordinary with 43.1 per cent, given Bitcoin and Ethereum’s price plunge while altcoins performed better following Elon Musk’s criticisms about Bitcoin mining and its environmental impact. In June, the growth stood at 8.9 per cent.
The second half of 2020 saw accelerated adoption of cryptos due to multiple events such as the sudden rise of DeFi in August, PayPal introducing crypto purchases to the U.S. users in November, and institutional adoption in December from companies such as Greyscale and MicroStrategy, the report added. Crypto adoption continued in 2021 with large enterprises such as Tesla, Mastercard, and others moving towards embracing digital currencies. Another significant development was El Salvador became the world’s first country to adopt Bitcoin as legal tender.