Diminished returns: Does Bitcoin perform worse than other altcoins when it comes to generating returns?

Altcoins have now outpaced the flagship asset after several months of hesitation. Many comparisons were made to 2017 in the first half of 2021 on crypto markets. The first half of 2021 in crypto markets brought many comparisons to 2017. Bitcoin (BTC), the new frontier in decentralized finance emerged and nonfungible tokens were gaining myriad celebrity endorsements. BTC’s performance is much less impressive than it was after its initial months of euphoria, and subsequent sell-off. Fears have been exacerbated by the recent market sell-off that resulted from the Evergrande crisis. It is important to note that many altcoins, especially platform tokens have experienced impressive runs, and in some cases even bucked wider market trends. BTC holders should be concerned that their flagship asset is not performing well, despite the possibility of another bull run during this halving cycle. 2021 by the numbersBTC saw gains of 113% between January and April when it reached its all-time high (ATH), which was nearly $65,000 in April. Current prices show that the year-to date (YTD) gains have been around 45%. ETH (ETH) has gained 497% between January 2017 and May’s ATH, while its year to date gains have risen over 300% despite recent losses. Even ETH’s impressive gains can’t be compared with those of its rival platform tokens. Cardano (ADA), a remarkable YTD increase of over 1,000%, has barely supported any real activity. Solana’s SOL has risen over 8,000% in the past year, surpassing that figure. This is after the SOL dropped from its all-time high of $200. Polygon (MATIC), Avalanche, (AVAX), and Terra (LUNA) are all worthy honorable mentions. All three have experienced impressive rallies in 2021. Stephen Gregory, CEO of Currency.com, told Cointelegraph:”Generally, there is a lot of enthusiasm for Web 3.0, whether that’s powering the metaverse with ETH, or much faster transaction times with SOL, or whatever the future holds for ADA. People view layer-one protocols being strong value picks in the future. It seems prudent to invest in sound tech and follow the momentum and progress of the asset class after real-world use cases. The numbers seem to show that BTC is performing poorly compared to other coins. This could be explained by the law of diminishing return. BTC is twice as old as Ether and is the oldest asset. While Bitcoin has been a huge success, making billionaires from early adopters, is it possible that the flagship asset will continue to provide three- and four-figure returns as it ages? It seems plausible, given that Bitcoin’s entire economic model is built around the principle of diminishing return, with block rewards decreasing by half every four years. Cointelegraph reported that Bitcoin has started to mirror other assets as more institutions and investors invest. This is evident in the gradual decrease in volatility of Bitcoin over time. Investors continue to seek new assets of value, which is why markets continue to grow. While BTC may be producing lower returns, it should not surprise anyone that investors are more interested in volatile assets to make money from price movements. This raises other questions. Is BTC at risk of creating a self-fulfilling, negative cycle? Will BTC become less attractive as investors look for other assets to make large gains? Or, can we imagine that the current interest in platform tokens indicates that investors are gravitating towards the “no intrinsic worth” argument about Bitcoin? Platform tokens are more attractive than Bitcoin because they have stronger fundamentals and the potential to be adopted. Micha Benoliel is the co-founder and CEO of Nodle, a decentralized Internet-of-Things network. He believes platform tokens have a bright future, but not at the expense of Bitcoin. Cointelegraph spoke with him, saying that the market is only beginning to see the value of blockchain ecosystems. Altcoins are doing so well because they are more a store of value. Bitcoin, which is more of a store-of-value, is on its way to becoming a crypto asset. It is also becoming a crypto asset type with less risk and suitable for long-term investors. Is $100,000 Bitcoin still possible? Another angle is that even though Bitcoin returns are decreasing compared to historical highs, gains continue outstrip other assets like stocks and gold. BTC will continue to provide superior performance at the current rate of diminishment. It seems unlikely that there will be an exodus. Cointelegraph was told by Daniele Bernardi (CEO of Diaman Group), that Bitcoin is performing poorly in percentage terms compared to other small- and medium-cap coins. Don’t forget about the large capitalization difference. BTC prices rising by 10% would increase the market cap by $80billion. For example, if Solana increases by 100%, the market cap will increase by $40 billion. This is why I don’t believe there’s any reason to doubt Bitcoin’s market-leading position. It’s up 450% so far in 2021. If the trend continues, we can expect a year-end BTC price around $138,000. This estimate is very close to the $135,000 year end price predicted by stock-to-flow (S2F), which continues to be the most accurate prediction of Bitcoin prices. August’s BTC closing prices are, to a certain extent, the same as those predicted by PlanB back in June. September’s could follow suit. Bitcoin is solidThe numbers show that BTC’s returns have been declining over the course of consecutive bull cycles. This shouldn’t surprise anyone considering Bitcoin’s economic model. Michael van de Poppe is a Cointelegraph contributor and full time trader. He told Cointelegraph that investors shouldn’t be concerned. It is a normal tendency of the markets to slow down or have longer cycles. This will be a trend we will continue to see and will open up more opportunities for investors. Bitcoin should be less active in their performance and daily movements than it is now. However, this should not diminish the fact that Bitcoin has been delivering a healthy performance, in line with bullish forecasts. Igneus Terrenus from Bybit’s communications department said that Bitcoin is still the best choice for anyone looking to enter the space, whether they are individuals or institutions. He told Cointelegraph:”Bitcoin remains the best investment-grade crypto asset for institutional investors. A more stable range pattern could actually be a benefit to Bitcoin as an alternative to gold, and fuel its long-term rise. Bitcoin returns outperform everything when one zooms out to five or ten years — horizons familiar for whales and institutional investors. The models also show that there is still reason to believe in a BTC price above six figures at the end of each year. Gregory, Currency.com’s chief economist, agreed that there is increasing demand for platform tokens despite this. Cointelegraph spoke with Gregory, who said that BTC is outperforming Wall Street but is being held back by macro market trends as well as Wall Street events. But historically Q4 has been the strongest quarter for BTC and it is likely that history will repeat itself before 2021. However, BTC is not in danger of losing its status of crypto’s flagship asset. Altcoins are undoubtedly offering greater opportunities for those who believe they have the ability to time the markets.

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