Issuance of Digital Assets Will Force Bitcoin (BTC) to go Lower

For almost a decade to this day, save for the early part of 2018, the Bitcoin (BTC) price has ensured that the asset class ruled crypto markets with an iron fist. Meaning Bitcoin (BTC) has been dominating the other altcoins. However, as the Blockchain technology is been propagated, with digital tokens now becoming more common than ever, financial analysts claim that Bitcoin’s unquestioned hegemony will ultimately come under fire.

Bitcoin (BTC) Price Today – BTC / USD

Name Price24H (%)
Bitcoin (BTC)
$9,146.00
-0.39%

Crypto Asset Flood Could Put Downward Pressure On the Bitcoin (BTC) Price

Reports have it that the research division of the St Louis Federal Reserve Bank has been interested in digital currencies. The division of the Central Bank of America initially published a paper highlighting virtual currencies nearly half a decade ago, and since that time onwards, the financial entity has continued to reveal analysis pieces on cryptocurrency markets.

In a recent content called “Whither The Price of Bitcoin?” two economists with the St. Louis FED explained that the value proposition for Bitcoin (BTC) is bound between indefinitely appreciating because of supply caps, and increasing demand.

They explained this with the aid of a hypothetical analogy. The Hamilton ($10) and Lincoln ($5) bills were both used which highlighted an increase in the Lincoln bill supply would initiate a downturn for the purchasing power of both banknotes. As per the report, the entity noted that:

“The increase in the Lincoln bill supply has caused a decline in the purchasing power of the Hamilton and Lincoln bills even though the Hamilton bills supply remained fixed.”

Altcoins May Threaten Bitcoin’s Fiat Value

While the St Louis Federal Reserve Bank researchers acknowledged that the above scenario couldn’t be applied to digital assets directly, they explained that other cryptocurrencies might threaten Bitcoin’s fiat value. Considering that crypto assets are getting issued regularly, with thousands of projects capitalizing on the growing demand, the St Louis FED research stated that Bitcoin (BTC) value would drop.

Interestingly, the findings of the St Louis Federal Reserve Bank researchers wasn’t baseless, because it drew attention to the Bitcoin (BTC) market dominance. It specifically cited the dominant assets collapse in recent years. Hence, the St. Louis FED found that while Bitcoin is unlike to decline to $0, a flood of alternative crypto may put a “significant downward pressure” on Bitcoin’s purchasing power as well as that of the wider crypto community.

Reports in the Sector Say Something Different

While this is partially a bearish outlook, it is just theoretical, according to a report from the multinational management consulting start-up, A.T. Kearney. This firm expects for the dominance of Bitcoin (BTC) to grow this year. In a previous report, A.T. Kearney expects Bitcoin’s market capitalization to reach two-thirds of the overalls crypto aggregate value. When citing reasons for this theory regarding a 66% target (which is firmly a possibility), the American firm reportedly declared that most altcoins had lost their spark due to the growing risk aversion tactics been issued by investors.

Bitcoin’s (BTC) fundamentals have historically outperformed its counterparts. In 2018, Bitcoin was highly adopted, which led to the fundamental growth, and development of the Blockchain network. Bitcoin is actually thriving in terms of every other metric apart from price. With institutional investors focusing on the Bitcoin (BTC), the prospects of the asset class isn’t too dismal in the end despite the type of harrowing the St. Louis FED report indicated.

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