Bitcoin’s dominance of the cryptocurrency markets will nearly double as more investors gravitate to the original digital asset while regulators continue to crack down on the sector, according to MicroStrategy Inc.’s Michael Saylor.
Bitcoin currently accounts for nearly 48% of crypto’s $1 trillion market value, according to data tracker CoinMarketCap. Its dominance will rise to 80%, as other coins are declared securities by regulators and their use is reduced, Saylor said in a Bloomberg Television interview. MicroStrategy is the enterprise-software that Saylor co-founded and has made into the largest public holder of the cryptocurrency.
Earlier this month, the US Securities and Exchange Commission labeled 19 coins as unregistered securities in lawsuits against crypto exchanges Binance, Binance.US and Coinbase Global Inc.
Saylor predicted that only Bitcoin and perhaps a dozen other coins — of the current more than 25,000 — will be deemed not to be securities, and will continue trading on US crypto exchanges. Coins that might be spared may use the same way of ordering transactions as Bitcoin, called proof of work and using powerful computers.
“The entire industry is kind of destined to be rationalized down to Bitcoin and a half a dozen to a dozen other proof-of-work tokens,” Saylor said. He expects Bitcoin’s price to increase tenfold and then again tenfold from the current $25,813.
Bitcoin dominance typically increases during cyclical downturns for the industry, and drops during bull markets, when more investors pour their money into other tokens, often referred to as alt coins. Bitcoin accounted for the majority of the market in its early years, but its dominance dropped to as low as 34% in 2018 before creeping up again. Last year, crypto prices dropped as scores of crypto companies, including exchange FTX and lender Celsius Network, went bankrupt. Bitcoin dominance has been rising since a low of 38% last November, according to CoinMarketCap.
Saylor began buying in 2020 to reduce MicroStrategy’s holdings of cash, saying it was being eroded by inflation. By the end of March, MicroStrategy held a total cache of 140,000 Bitcoin, according to its financials.
MicroStrategy’s shares are up 98% since the beginning of the year. Bitcoin has gained 58% during the same period.