Run the Numbers #19: Bitcoin in the Mainstream

Bitcoin & Data Science

2021.01.09

Thinking back to the 2017 bull market, Bitcoin got a lot of attention from mainstream media and public figures. But so did a lot of garbage altcoins and general “crypto” hysteria, often touting how the magic of “blockchain technology” was going to revolutionize every industry. Well… we’re waiting!

Publications from Bloomberg to Vice were pumping out stories about how cryptocurrencies were the future and anyone who wasn’t buying them was going to be left behind. Most journalists and influencers during this period missed that Bitcoin was the real innovation and instead hyped up all the other cryptocurrencies piggy backing on Bitcoin’s success. Here’s a great example of the 2017 crypto mania from the New York Times, displaying two finance bro looking men wearing Bitcoin and Ethereum (one of the most popular altcoins) sweaters:

Source
Source: New York Times

Now that we are firmly in another bull market, Bitcoin is again getting plenty of attention from mainstream media, celebrities, and politicians alike. But have they learned their lesson this time or are we in for another altcoin-pumping hype cycle?

Source: tradingview.com

No doubt there have been plenty of headlines, tweets, etc. in recent weeks talking about the promise of x cryptocurrency and how it will change the world, but it does seem there is more of a focus on Bitcoin this time around. The chart above shows the so called “Bitcoin Dominance” – the percentage of Bitcion’s market cap in comparison to the overall cryptocurrency market cap, which just exceeded $1 Trillion for the first time earlier this week. Of course Bitcoin represented 100% of the total market cap for the first years of its existence as there were no altcoins to speak of. Some early altcoins started to take a small market share between 2014 and 2016, but things really got out of control starting in early 2017.

2017 saw the Initial Coin Offering (ICO) mania as well as the hype around Proof of Stake (POS) blockchains, and a list of other nonsense. That year saw the Bitcoin Dominance index fall from 95% to 35% at the height of the bubble! Since then the statistic has slowly risen back to over 60%. What’s interesting is that it seems to on the rise still, even as we see massive price moves to the upside in Bitcoin and altcoins alike.

It does seem that the mainstream has learned some lessons since the previous bull market. I am seeing many more articles about institutional involvement in Bitcoin, Bitcoin futures and ETF’s coming to market, and company treasuries diversifying into the asset. It is my intuition that this trend will continue over the years as Bitcoin matures and goes through more bull market cycles, leaving over hyped altcoins and the promised “blockchain technology” in the dust.