Cryptocurrency Market Is Becoming Even More Concentrated

(Bloomberg) -- While Bitcoin has dominated the headlines in the cryptocurrency market since its introduction more than a decade ago, the sector is becoming even more concentrated among it and two rivals.

Bitcoin, Tether and Ethereum accounted for about 90% of trading volume on digital-asset exchanges this year among top-10 cryptocurrencies, up from 75% a year ago, according to researcher Messari.

The change follows a deep market crash in March, when Bitcoin as well as the more than 5,000 other coins listed on crypto exchanges nosedived. Searching for safety, many investors also flocked to Tether, which is a so-called stablecoin, whose value is supposed to not deviate much, and is used as a conduit to purchase other coins.

Historically, Bitcoin hasn’t dropped as much as many of the smaller coins during market crashes. It also just went through the so-called halving, when new coins issued to computers supporting the network as a reward were decreased. Enthusiasts have also made the case recently that it’s a hedge against inflation with central banks seeking to boost growth amid the coronavirus pandemic.

Ether, meanwhile, is the leading digital ledger technology that allows for execution of autonomous transactions controlled by software. It’s widely expected to unveil new, enhancing technologies this year.

©2020 Bloomberg L.P.