Author: Huang Shiliang
Over the past year, Bitcoin's market capitalization share in the cryptocurrency field has been continuously expanding, now reaching a five-year historical high of over 63%.
This figure might be the biggest blow to ETH investors, not necessarily the ETH price itself. At least for me, it's almost enough to make me want to cry under the blanket. If I had started lying flat five years ago, I wouldn't be in this situation today.
Starting from the ETH/BTC exchange rate dropping by 4%, I kept asking myself, will this continue to fall? What should I do? Damn, it's infuriating, I kept asking until it fell below 2%, completely speechless.
We need to seriously consider this question: Will Bitcoin's market capitalization lead continue long-term? Is investing in cryptocurrency just about lying flat on BTC and giving up on everything else?
I wanted to compare the situation in other fields and see if industry leaders maintain long-term dominance.
The most obvious comparison is gold. I asked ChatGPT and Gemini to research the market value distribution of precious metals, as shown in the table below:
Table 1: Market Value Distribution of Precious Metals
Gold's market dominance mainly comes from its brand, formed by thousands of years of use as currency and a store of value. This kind of brand creates a fixed imagination in human minds, and this barrier is extremely high.
I feel Bitcoin is somewhat similar.
The second comparison that came to mind was the proportion of national currencies in global foreign exchange reserves. ChatGPT and Gemini were called upon again.
Table 2: Global Foreign Exchange Reserve Currency Structure for Q4 2024
The US dollar holds an absolute monopoly. The core reasons are that the US is the world's largest economy, its bond market is deeply irreplaceable, and global major international trade, especially oil, is priced in dollars. Additional supporting factors include the US's politics, culture, and the Federal Reserve being incredibly powerful.
However, the current trend might be a decline in the dollar's monopoly, mainly challenged by the renminbi.
Compared to Bitcoin's market capitalization share in the cryptocurrency field, Bitcoin does not have the same advantage as the US dollar. Bitcoin has not created the most useful thing in the blockchain world. In contrast, the second-place Ethereum seems more like the dollar, providing various infrastructures and use cases for the entire industry.
Let's look at the situation of major companies.
Please note that to effectively compare, I used the "value capture" share of companies, directly related to profitability, not market share (user volume) or stock market capitalization distribution.
Table 3: Profitability Share of Well-Known Companies in Their Industries
From these three cases, we can summarize several value capture mechanisms.
Brand and Premium: iPhone, Maotai, Gold, BTC undoubtedly fall into this category
Technology/Capital Barriers: NVIDIA, TSMC
Network Effects: AWS, Google
Resource Scarcity or Sovereign Endorsement: Gold, US Dollar (Bitcoin might relate to this)
Economies of Scale: Amazon Cloud Computing, TSMC Wafer Foundry, NVIDIA GPU
I believe the core factor for Bitcoin's dominant market capitalization share in blockchain is: brand.
The brand's ability to capture value in the same industry is impressive - Apple phones capture 85%, gold captures 90%.
If competition among cryptocurrencies ultimately depends on brand, Bitcoin's current 63% market share is not high.
If that's the case, ETH holders will truly be crying.
But can we believe that brand is the absolute core of coins and blockchain?
Shouldn't it be decentralization, network effects, user volume, application scenario landing, and so on?
I don't have a final answer yet.
But never underestimate the value of a brand.
