Investing.com — Bitcoin soared to an all-time high of over $100,000 this week on optimism about deregulation under President Donald Trump, but Citi believes regulatory clarity will help the crypto market warned that Bitcoin's dominance in the market could be undermined.
Dominance is a measure of a coin's relative share in market capitalization compared to the broader crypto market. It hit a nearly three-year high of about 59% in late November, but plummeted to 53.9% by Friday, according to data from Coinmarketcap.
On Thursday, virtual currency market capitalization (EPA) reached an all-time high of $3.7 trillion, largely due to the rise in Bitcoin. The latest endorsement is President Trump's nomination of pro-cryptocurrency lawyer Paul Atkins to be the next chairman of the Securities and Exchange Commission.
Citi analysts noted the prospects for regulatory clarity and added that recent macro factors also point to a positive picture for cryptocurrencies.
But they cautioned that regulatory clarity could further expand the use cases for cryptocurrencies, widen the appeal of the asset class and promote the strengths of coins and tokens beyond Bitcoin.
“In the long term, the utility and value of a network will be related not only to usage, but also to macro correlations and production costs. New regulatory regimes will unlock even broader use cases for blockchain assets. ”Citi analysts wrote.
In such a scenario, Citi warned that Bitcoin, which is already treated as a commodity, would have “less benefits compared to other coins.” The company also warned, like many of its peers, that Bitcoin is unlikely to be used as a reserve asset.
Bitcoin has fallen sharply from Thursday's all-time high of over $100,000, before stabilizing around $97,000 in volatile trading on Friday.
