Coinbase, one of the most popular exchanges in the cryptocurrency space, released a report in which they show how Bitcoin (BTC) is used. The report shows that Bitcoin is used in order to acquire other digital assets. This is due to the fact that, in general, other currencies do not have fiat pairs as Bitcoin does.
Bitcoin or Altcoins?
The research was able to find that 60% of the users acquire Bitcoin as the first currency. However, 24% of these users remain in BTC without acquiring other digital currencies. 36% of the accounts on Coinbase acquired other virtual currencies after they purchased Bitcoin. Moreover, 40% of the users on this platform didn’t buy Bitcoin as their first digital asset.
During the last years, Bitcoin has shown how it is possible for it to have a large dominance over other digital assets. Indeed, Bitcoin kept with a market dominance between 65% and 70% in the last months.
Coinbase also shows that despite Bitcoin being the most popular cryptocurrency, they see a trend during which bull markets seem to push investors to acquire other digital currencies rather than BTC alone.
On the matter, the exchange explained:
“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).”
Once a bull market ends, the report shows that from altcoins there is a return to Bitcoin, which is considered to be the safe crypto, compared to other digital assets.
Coinbase has been expanding as an exchange from three cryptocurrencies in 2017 to over twenty they are currently offering. While they were only allowing users to acquire Bitcoin, Ethereum (ETH) and Litecoin (LTC), now users can also buy Decentraland (MANA), XRP, Bitcoin Cash (BCH) and many others.
Moreover, the report shows that Coinbase customers are trading altcoins more than their relative market capitalization would suggest. For example, they trade ETH and LTC over 2% more than what their market cap is. Bitcoin, instead, is traded 16% below its market capitalization would suggest.
It is also worth mentioning that Bitcoin is the most accepted and used virtual currency around the world compared to altcoins. If companies decide to start working with virtual currencies, Bitcoin is expected to be the first one. This can also have a positive influence on how BTC remains the leader in the market compared to other virtual currencies.