What’s preventing cryptocurrencies from becoming more popular?

Experts point out that the two largest cryptocurrencies by capitalisation could face significant “challenges” in the coming years. Here’s a quote from their publication, mentioned in the news publication Decrypt.

We believe that the biggest challenge for Bitcoin in the future is its volatility, as well as growth and correction cycles, which prevent further acceptance of the coin at the institutional level.


It is worth noting that high volatility - that is, sharp price movements - is common to many assets today, including those outside of the cryptocurrency niche. And it's strange to see this as a problem for big investors, some of whom have had time to get involved in crypto on a large scale. Still, they are already doing it.

Well, the mentioned down and collapse cycles are a familiar phenomenon in the equity market as well. Therefore, the point of this rejoinder in the current realities is not quite clear.


Bitcoin price over the last 90 days

In addition, Bitcoin, which has fallen almost 52 per cent from its November record high of $69,044, has also been five times more volatile than gold. Many crypto investors argue that Bitcoin is “digital gold”, meaning that it serves as a hedge against inflation, just like precious metal.

Unfortunately, the recent correction of the coin shows that it is far from being a good investment even for the short-term crisis in the global economy. As a reminder, the correlation between the price of BTC and the biggest US stock index, the S&P 500, which is also showing a decline, has increased significantly recently. In other words, at least in 2022, Bitcoin will never assert its assigned status as an “alternative investment”.

Share of largest coins in total market capitalisation

At Etherium, however, the problem is slightly different: it’s about a growing threat from competitors. JP Morgan says projects like Solana, Terra, Binance Smart Chain, Avalanche and others have received a lot of attention from investors during the decentralized finance and NFT growth boom.

As a reminder, DeFi are applications from the decentralised finance sector that aim to automate the operation of blockchain-based banking alternatives. Such applications are usually created on the Ether network, but because so many people use them, they have become expensive and slow.

With this in mind, other blockchains have emerged to compete with Ethereum. And as analysts point out, Ether is increasingly losing out in this competition. Here’s their cue.

What was striking during this month’s correction was that Etherium failed to regain market capitalisation share compared to its major competitors, as its price declined by a similar amount compared to smaller altcoins.

What the experts mean is that investors bought other similar projects more aggressively after the collapse than they did with ETH.

Cryptocurrencies

However, all of this is not yet indicative of any potential “weakness” in both Bitcoin and Etherium. Both cryptocurrencies remain “safe investments” in the market: they have huge reputations and so many other projects depend on their market dynamics. It’s just that they now have more alternatives that investors are advised to look out for. However, in that case massive popularisation awaits the whole coin niche, not just the capitalisation leader in the form of BTC and ETH. And that’s a good sign for the industry in any case.


We think that JP Morgan's comments were rather strange. On the one hand, there is Bitcoin, which supposedly big investors will not want to mess with - but they already do. Then there is Etherium, which is losing out in terms of popularity growth rate to other blockchains - although this is positive for the whole cryptocurrency industry and blockchain projects. Still, if the already-mentioned Binance Smart Chain and Avalanche suddenly take the top spot in terms of recognition, the niche will only benefit.