Bitcoin (BTC), being the flagship cryptocurrency, seems to have become a significant determinant of different crypto market trends. If it drops, most of the crypto markets drop and vice versa. In that context, a Coinbase report suggests that BTC acts like a gateway down the altcoin world.
The Coinbase research discovered that while 60% of users buy BTC as their first crypto purchase, just 24% of investors maintain the Bitcoin faith.
Investors now seem more willing to consider the altcoins during bull runs. That was proven when Bitcoin’s market dominance dropped rapidly to below 30% on Coinbase during the Initial Coin Offering (ICO) craze and Ethereum (ETH) run in 2017.
For just a short time, Ethereum became the dominant asset traded on the platform; with almost 50% of the trading volume.
One commentator from Coinbase Corporate Development, Justin Martin, explained in Around The Block the sentiment that caused this behaviour:
“This could be for a variety of reasons, but one is largely psychological. As people feel good about their initial crypto investments (into Bitcoin), they branch out to find other possible categorical winners (as evident in the 2017 bull run).”
A Drug That Gives Constantly
Other analysts and commentators have noted that Bitcoin sometimes acted as a type of ‘gateway drug’ to other cryptos in the past. Nick Colas, a Bitcoin analyst, said in an interview with CNBC that the elevated enthusiasm during the 2017 bull run:
“has now morphed into a general craze… I think of Bitcoin as a kind of a gateway drug”.
While speaking on Bloomberg Markets in June 2019, Messari Inc co-founder and CEO Ryan Selkis said that Facebook’s Libra project could also act as a ‘gateway drug’ for the cryptocurrency investors and it might probably lead them to Bitcoin.
Bitcoin Still Dreams To Become Digital Gold
As the bear market takes a toll on the economy amid times of fear; investors turn to Bitcoin as the ‘blue-chip asset of crypto.’
The report alleges that Bitcoin is moving towards its vision of becoming digital gold since altcoins are prized for their other services:
“To the extent, we believe that alternative assets and networks will provide differentiated services; (beyond the store of value and digital gold as Bitcoin is targeting). It will be important for the industry to build support for these other assets as well.”