NEW YORK: Bitcoin is serving as a refuge for much of the rest of the cryptocurrency market.
The largest digital asset gained as much as 2.4% to US$8,463 Friday while just about all the so-called alt-coins such as Ether, Litecoin and EOS were in the red. The flight to safety follows an announcement by Malta-based Binance that it will no longer be able to provide services to US traders starting in September. The world’s biggest crypto-trading platform updated its terms of service to say it is instead launching a separate exchange for Americans.
The shuttering of the exchange to US investors limits those traders and pushes them to sell, said Bloomberg Intelligence analyst Mike McGlone. They have to sell and park their money in Bitcoin, he said. “It is the benchmark go-to store-of-value.”
That assessment rang true to Alex Kruger, a global macro and crypto trader, who wrote about the phenomenon on Twitter. “It’s very normal when crypto speculators, when they exit an asset class, they exit into Bitcoin,” he said in an interview. “It’s just the asset of choice.”
The change in Binance’s terms of service comes weeks after it disclosed that hackers – as part of a “large scale security breach” – stole about US$40 million of Bitcoins via a single transaction. The exchange’s own BNB coin fell as much as 6.4% on Friday, according to data from CoinMarketCap.com.
There are other explanations for Bitcoin’s outperformance, as is often the case in the crypto world. For John Spallanzani, portfolio manager at Miller Value Partners, reports detailing Facebook’s plans to launch its digital currency are pushing people to “gravitate” toward Bitcoin.
“Everybody is looking at the Facebook entry as a positive for Facebook and crypto and payments in general,” Spallanzani said by phone. “Bitcoin initially was established as the payment mechanism, the missing piece for the internet. Bitcoin was supposed to fill that void which obviously it has been,” he said. “I don’t think they’re going to buy Litecoin because of that.”