Major cryptocurrencies have struggled to sustain their upward momentum secured earlier this week, on February 23. Bitcoin has fallen below the $10,000 mark again, while Ethereum’s native cryptocurrency Ether has struggled to spike above $900.
Earlier this year, the dominance index of bitcoin reached an all-time low at around 32 percent. Throughout the recovery period in February, the dominance index of bitcoin, which measures its dominance over the global cryptocurrency market, rose significantly, to around 39 percent, as most cryptocurrencies in the market followed the price trend of bitcoin.
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While bitcoin has performed better than Ethereum, tokens, and other major cryptocurrencies in the market in the past month given that it has increased by nearly two-fold since dipping to $6,100, it has been extremely volatile.
After the initial bear cycle and slump in January, analysts expected the price of bitcoin to start recovering to its previous levels by late February. But, bitcoin has continued to move in between the $9,500 and $11,000 range, without major buy volumes or rallies to push its price to $12,00 and potentially to early January levels in the $14,000 to $15,000 range.
Many traders have expressed their concerns over the short-term performance of bitcoin, primarily because of its low volume and the sudden spike in the daily trading volume of Tether, a US dollar-backed cryptocurrency, which traders on major cryptocurrency trading platforms like Binance use to hedge the value of major cryptocurrencies.
Adam Back, a bitcoin expert and the CEO at blockchain development company Blockstream, noted that while technical analysis may demonstrate a highly volatile future for bitcoin, technical developments and fundamentals point toward an optimistic future for bitcoin.
“Sounds like chartism/tea-leaves over fundamentals: tech investment, scaling progress, infrastructure development pace & ecosystem collaboration, institutional financial products, retail investment products, all at all-time high. I take opposing view: fundamentals are strong, long bitcoin,” said Back.
This week, the largest bitcoin wallet platform and cryptocurrency trading platform Coinbase announced the integration of Segregated Witness, a transaction malleability and scaling solution, along with transaction batching, following the implementation of SegWit by another leading cryptocurrency exchange in Bitfinex.
On February 23, the Coinbase team stated that SegWit has already been rolled out to 25 percent of customers, which exceeds more than 3 million users.
Emphasizing the potential of second-layer scaling solutions like the Lightning Network, Coinbase wrote, “new technologies which require SegWit, like the Lightning Network, have the potential to significantly increase the usefulness of Bitcoin as a payment network and benefit customers. We currently have a dedicated full-time software engineer working on open source contributions to the Lightning Network.”
By fundamentals and technical developments, Back likely referred to SegWit, Lightning, and other potential privacy solutions like Bulletproofs, which are being actively developed by bitcoin developers in its open source community.
Hence, while the entire cryptocurrency market remains highly volatile both in its upside and downside, its price trend does not accurately portray the magnitude of developments and increase in user activity of major cryptocurrencies like bitcoin and Ethereum.