What Happens to Altcoins if JPMorgan Is Right About Bitcoin?

JPMorgan has recently moved its long-term Bitcoin target from $150,000 to $38,000. Accidentally, that’s where Bitcoin is trading right now. Analysts have focused on whether JPMorgan is right about Bitcoin, but we’ll look at this story from another angle – what happens to the other 17,000+ coins if JPMorgan is correct?

Bitcoin Still Determines the Size of the Crypto Market

The rise of major projects like Ethereum, Cardano, Solana or Terra led to a material decline in Bitcoin’s share of the total crypto market cap.

Bitcoin Dominance, which measures Bitcoin’s market cap as a percentage of total crypto market cap, declined from 2021 highs at the 72% level to the 42% level.

While this decline is material, current numbers higlight Bitcoin’s complete dominance as just one cryptocurrency out of more than 17,000 holds a 42% market share.

The liquidity of Bitcoin attracts institutional investors who move markets. When JPMorgan lowered its long-term forecast for Bitcoin, it highlighted the coin’s volatility as a reason for smaller Bitcoin allocations in investor portfolios.

Can the Market Grow Without Bitcoin?

Bitcoin has grown into a symbol of the crypto world, and any problems of Bitcoin will hurt other projects as well. Here’s why.

Those institutional investors who have already allocated funds to crypto have started with Bitcoin. Companies with cryptocurrencies on the balance sheet, like Tesla or Block, have chosen Bitcoin as well. If their Bitcoin holdings cause losses, they will have trouble explaining to their investors why they need to increase allocation to other cryptocurrencies.

While fans of other crypto projects may argue that they are better than Bitcoin and can take its market share, the current reality is simple – Bitcoin’s success is very important for the success of other projects.

If Bitcoin stagnates near current price levels, other projects may have trouble growing as big players will not increase allocations to the crypto segment in this scenario. Put simply, if institutional investors are not ready to increase Bitcoin allocations, they will not increase altcoin allocations as well, which will be bearish for altcoins.

If Bitcoin fails, it will lead to losses for institutional investors and high-profile companies and make the whole crypto market segment toxic.