2022-01-10 22:24:36

Crypto goes a lot further than just Bitcoin

The cryptocurrency asset class continues to grow as coins offering exposure to new technology and services enter the space.

One of the more interesting trends in cryptocurrencies is the relationship between them.

While some lump all of the various coins into one basket, there have been some interesting moves going on between the coins.

Bitcoin – long the biggest and most successful of the cryptocurrencies – has not had everything going its way for a change, with its dominant position reducing a little in the face of a wave of newer coins that are attracting speculators and investors.

Of course, much of that is a function of price, with Bitcoin suffering as some of the smaller hot newcomers take off, such as Polkadot and Cardano.

That could change quite quickly if there was a rush back to Bitcoin – something that some chartists are tipping for the future, pointing to past rapid rises in the price of Bitcoin after it suffered a series of falls.

Bitcoin off by around 20% – giving other coins room to grow

By some estimates assets under management for Bitcoin related investment products fell by about 20% to $54 billion in December, even as the cryptocurrency continued to make progress in becoming a legitimate part of the global economy.

That has seen Bitcoin fall below 70% of the digital coins as some of the smaller coins make up some ground as their value and networks expand.

Many cryptocurrencies other than the largest few posted spectacular returns in 2021, with Dogecoin, Polkadot and Cardano all becoming better known – along with the stablecoin Tether.

Is Ethereum Bitcoin’s natural successor?

The continuing success of Ethereum – the second largest cryptocurrency which has risen against Bitcoin – has given hope to those who think it is eventually a natural successor to the Bitcoin throne due to its decentralised smart contract platform which also hosts some other coins.

Eventually, they see the ability of Ethereum to host smart contracts and decentralised applications as the key to it running a suite of financial products and one day becoming the dominant cryptocurrency.

This process is known as “the flippening” and happens when the currency on this platform – Ether -takes over as the dominant cryptocurrency – as measured by market capitalisation but also other measures including active addresses, transaction count, transaction volume, trading volume, total transaction fees, node count and even number of google searches.

While there is no guarantee the flippening will ever happen, the fact that it is still actively talked about and monitored despite Bitcoin’s big advantage is another interesting wrinkle in the cryptocurrency universe.

US regulators put a hand brake on Bitcoin ETF’s

Perhaps the biggest retarding influence on Bitcoin’s advance has been the reluctance of the US    Securities and Exchange Commission (SEC) to greenlight a physical (spot) Bitcoin Exchange-Traded Fund (ETF).

Proposals by Grayscale Investments LLC and Bitwise asset management group were in December put on the backburner by the SEC, which will take another 45 days to review the proposals.

That means that the SEC will is now expected to determine whether to approve or disapprove Bitwise and Grayscale applications on February 1 and February 6, respectively.

In its reasons, the SEC wrote that: “The Commission finds that it is appropriate to designate a longer period within which to take action on the proposed rule change so that it has sufficient time to consider the proposed rule change and any comments received.”

On November 12 last year, the SEC denied the approval of VanEck’s physical Bitcoin ETF to trade on Cboe Global Markets Inc, and in early December, the regulator rejected a spot bitcoin ETF by the asset management firm, WisdomTree after it had already delayed the decision since the previous June.

The SEC has long argued that spot Bitcoin ETFs violate securities rules because the market is prone to fraud, manipulation and abuse, although it is comfortable with futures-based ETFs because Bitcoin futures trade on highly regulated exchanges – unlike actual Bitcoin.

Australia in final stages for Bitcoin and Ethereum ETF’s

Here in Australia, BetaShares and ETF Securities are both in the final stages of getting approval for direct Bitcoin and Ethereum ETF’s and BetaShares already has a pure-play crypto ETF product which is trading as ASX: CRYP.

These products come after Australia’s corporate regulator, the Australian Securities and Investments Commission (ASIC), came up with some strong guidelines covering crypto exchange-traded products include a number of safeguards which should protect investors from some of the more serious scandals that have plagued the crypto industry.

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