The cryptocurrency ecosystem is agog with the news that revealed electric vehicle manufacturer Tesla Inc. has added $1.5 billion worth of Bitcoin (BTC) to its balance sheet. The news which was reported on Monday also features the world’s most valuable auto brand expressing readiness to accept Bitcoin payments for its products.
The move by Tesla and its CEO Elon Musk is arguably the biggest institutional bet on Bitcoin this year, and by far, the most publicized. The purchase of Bitcoin by Tesla has been welcomed by the crypto community, with many expecting other top Wall Street firms like Apple Inc. to follow the trend.
Last year was the big bang season where Institutional investors began showing genuine interest in Bitcoin. Despite 2020 being a record year for the investments made, the bets have prompted more executives to consider storing their excess cash in Bitcoin, which set the coin on a path of valuation explosion.
More institutions are certainly poised to adopt cryptocurrencies in the near future, but when they do, the chances of sidelining Bitcoin for other altcoins are very low. The question that beckons at the mind of pro-altcoin investors is what the fate of the over 8,000 cryptocurrencies are while the big guys stock up on Bitcoin.
The adoption of any one cryptocurrency moving forward will be based on the unique value it brings to the table. Already, many people are already positively disposed to Bitcoin, and Ethereum (ETH) to an extent as those are the major cryptocurrencies that make the headlines on mainstream media.
There are about 8,416 digital currencies listed on crypto data aggregator CoinMarketCap, and for any one of them to attain mass or near-mass adoption, it must have a unique value and an addressable market.
This is one of the major reasons why decentralized finance (DeFi) tokens including Aave (AAVE), Maker (MKR), Polkadot (DOT), and others are gaining massive traction in the space today.
While the big institutions and high net worth individuals continue to place their bets on Bitcoin, many have seen an option with altcoins. As the pump up of cash in Bitcoin continues, so also is the price and the entire valuation of the asset. When this happens, Bitcoin may be fundamentally more scarce and more expensive for the retail investors, a situation that is set to divert the attention of this set of investors to altcoins.
Many altcoin watchdogs are already foreseeing a profitable 2021, with series of projections and expectations for altcoins to see a robust growth year. With the top altcoins including Ethereum and Polkadot already on pace for impressive growths this year, the potentials for each of the hoard of altcoin out there to begin contributing more to the overall market cap of the crypto market is high.
There are cases where investors opt for swap crypto as well. This allows users to swap between Altcoin and Bitcoin. The first altcoin exchange was performed between Ethereum and Bitcoin on Oct 7, 2017.
As in the case of Bitcoin which attained limelight with a major pump and dump over the years, these altcoins may exhibit instability as retail investors begin to stock up on them, but the volatilities around them are bound to crest as the adoption grows over time.