Top Performing Digital Currencies Saw Dramatic Gains in First Quarter
The first quarter of 2017 saw dramatic price gains for the top cryptocurrencies, as the total market added nearly $7bn in value.
The so-called ‘blue chip’ cryptocurrencies – those with a market cap greater than $30m – saw aggressive growth in the first quarter, as bitcoin’s waning dominance set the stage for new players to assert themselves.
Of the top 14 most valuable cryptocurrencies based on market cap, all but one had a positive performance during Q1 2017. (Litecoin, the only loser, decreased 6.9% over the course of the three months, though its price skyrocketed soon after.)
The other 13 cryptocurrencies posted a median price increase (in USD terms) of 111.66% over the course of the quarter.
This quarter’s superstars were ethereum (ETH) and dash (DASH), which gained 600% and 846%, respectively, during Q1 2017.
The best day for ethereum was 17th March. That day, the second largest cryptocurrency by market cap reached both an all time price high of $55.11 and a record 24-hour volume of $554m, according to CoinMarketCap.com. The two events were the climax of a trend that has seen ethereum volume increasing substantially as the currency gains more exchange integrations.
As for what was driving the trend, that was less clear.
The most newsworthy development regarding ethereum in the first quarter was the announcement of the Enterprise Ethereum Alliance, a new group of companies that plan to develop blockchain applications using a private version of the ethereum protocol.
Companies included in the alliance are JP Morgan, CME Group and BNY Mellon, among others; ethereum industry partners like ConsenSys and Tendermint will work alongside these companies to oversee code development.
What’s also unclear is the explosion of growth for privacy-centric dash. Reminiscent of late 2013-era bitcoin, dash gained nearly $600m in market capitalization during Q1. Trading at only $11.26 on 1st January, the currency reached a high of $109.82 on 19 March with daily volume of $78m.
The increase in price bodes well for dash’s governance model, which collects 10% of block rewards and distributes them to proposals voted on by the community.
The currency was even relisted for trading on Bitfinex 3rd March after a 19-month hiatus due to low trading volume.
The dash bubble started to deflate toward the end of Q1, however, dropping from the all-time high on 19th March down to $75.60 on 31st March.
However, at least one analyst covering the cryptocurrency has speculated that the majority of dash transaction volume was fake, pointing to the fact that the average transaction value was around $4,000 – around four times greater than the typical bitcoin transaction.
— Chris Burniske (@ARKblockchain) February 23, 2017
Bitcoin’s performance in the first quarter was more muted.
The CoinMarketCap’s Bitcoin Dominance Index – which measures bitcoin’s market share relative to other cryptocurrencies – shed nearly 20%, ending the quarter at 68%. A weakening Bitcoin Dominance Index points to investor preference for alternative cryptocurrencies.
Barely outperforming litecoin (LTC), bitcoin (BTC) gained just 10% over the course of the quarter. This was a noticeable decrease from its 35.4% gain in Q4 2016.
General fear, uncertainty and doubt has permeated the bitcoin community and can arguably be blamed for the anemic performance of the cryptocurrency in comparison to alternatives.
Furthermore, bitcoin’s volatility has tapered off as a result of its maturation, coupled with the evolving narrative that the cryptocurrency is a safe-haven asset.
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