Executive Summary
As Bitcoin closed September 2, 2019, at $10,346 with a commanding 71% dominance of the total cryptocurrency market, the gap between Bitcoin’s price recovery and the broader crypto industry’s health was growing increasingly stark. While BTC had more than tripled from its December 2018 lows near $3,200, venture capital investment in blockchain and crypto startups had collapsed to a fraction of the previous year’s totals. On the same day, Bitfinex launched 100x leverage perpetual contracts, Binance teased its own futures platform, and the industry braced for Bakkt’s physically-settled BTC futures launch on September 23 — signaling that the derivatives arms race was officially underway even as funding for new projects evaporated.
The Numbers Unpacked
Bitcoin’s dominance above 71% on September 2 told a story of concentration. The total cryptocurrency market capitalization hovered around $267 billion, with Bitcoin alone accounting for approximately $185.3 billion of that figure. The altcoin market had been bleeding value against BTC for months, with many top-20 tokens significantly underperforming the market leader over the prior 90 days.
The funding landscape painted an even bleaker picture for the broader ecosystem. According to Crunchbase data published on September 2, total investment in ICOs and private funding rounds for blockchain and crypto companies reached just $3.38 billion in the first eight months of 2019. At that pace, annual investment was on track to reach roughly $5 billion — less than 40% of 2018’s $12.86 billion total. Venture capital specifically totaled approximately $2 billion year-to-date, putting it on pace for roughly $3 billion for the full year, compared to $4.65 billion in 2018.
Meanwhile, the derivatives market was expanding at breakneck speed. Bitfinex launched its perpetual contracts — BTCF0/USDt0 and ETHF0/USDt0 — with up to 100x leverage, using USDT as collateral. The products were positioned as hedging instruments rather than speculative tools, though the 100x leverage ceiling drew immediate comparisons to BitMEX’s popular but controversial perpetual swap. Bitfinex’s CTO Paolo Ardoino called the launch part of the exchange’s strategy to cement its position as “a market leader in innovation.”
Historical Context
The divergence between Bitcoin’s price strength and the broader crypto funding environment had been building throughout 2019. The ICO boom of 2017-2018 had flooded the market with billions in capital and thousands of new tokens, many of which had since lost 90% or more of their value. By September 2019, the crypto winter had claimed numerous projects, and investors were markedly more cautious about where they deployed capital.
The Thai crypto exchange BX.in.th announced its complete shutdown on September 2, 2019, becoming yet another casualty of the contracting market. The exchange, operated by Bitcoin Co. Ltd., had been one of Thailand’s most popular cryptocurrency trading platforms but cited unspecified reasons for closing its doors. The closure underscored the challenges facing smaller exchanges in an increasingly competitive and regulated environment.
Bitcoin’s resilience in this environment was partly attributed to growing institutional interest. The cryptocurrency had found a floor near $3,200 in December 2018 and had steadily climbed throughout 2019, punctuated by sharp rallies that drew headlines and retail attention. The upcoming Bakkt launch — backed by Intercontinental Exchange, the parent company of the New York Stock Exchange — was widely seen as a potential game-changer that could bring significant institutional capital into the Bitcoin market.
Expert Consensus
Market analysts were divided on what the combination of rising Bitcoin dominance and declining industry funding meant for the broader crypto ecosystem. Bulls argued that Bitcoin’s strength was laying the groundwork for the next phase of institutional adoption, with Bakkt’s physically-settled futures representing a critical piece of infrastructure. They pointed to the growing derivatives ecosystem — Bitfinex’s perpetuals, Binance’s forthcoming futures platform, and the existing CME and Cboe products — as evidence that sophisticated financial infrastructure was being built around Bitcoin.
Bears, however, noted that the CFTC’s Commitment of Traders report showed institutional traders holding significantly more short positions than long — 3,470 to 2,285 — suggesting that smart money was betting against a sustained rally. The sharp decline in crypto and blockchain venture funding also raised concerns about the long-term viability of the broader ecosystem, even as Bitcoin itself remained strong.
The Crunchbase report noted that neither the bull nor the extreme bear case appeared to be winning out in early September 2019. “Blockchain is still a thing,” the report stated. “It’s just not the thing that everyone’s talking about.” The muted venture capital environment reflected a maturation of the space, with investors becoming more selective and demanding actual product-market fit rather than funding whitepaper promises.
Forward Outlook
The September 2 snapshot captured a crypto market at an inflection point. Bitcoin was demonstrating remarkable price strength and growing institutional infrastructure, while the broader industry was undergoing a painful but potentially healthy contraction. The launch of Bakkt’s physically-settled futures on September 23 was positioned as the next major catalyst, with expectations that it would either validate the institutional thesis or expose the limitations of current demand.
The derivatives arms race between Bitfinex, Binance, and established players like CME and BitMEX was creating new trading opportunities but also raising concerns about excessive leverage and systemic risk. With 100x leverage products entering the market alongside growing retail participation, the potential for sharp liquidation cascades remained a significant concern.
For investors and market observers, the key question was whether Bitcoin’s dominance above 71% represented a flight to quality amid industry contraction — or whether it was setting the stage for the next altcoin season once institutional infrastructure matured. History suggested that periods of extreme Bitcoin dominance often preceded rotations into altcoins, but timing such rotations remained as difficult as ever.
Disclaimer
This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Past performance is not indicative of future results. Always conduct your own research before making investment decisions.
71% dominance and VC funding drying up at the same time. The 2019 derivatives arms race between Bitfinex 100x and Binance futures was wild. Bakkt ended up being a dud at launch though.
Bitfinex launching 100x leverage right as funding collapsed tells you everything about where the industry priorities were. Extracting fees from degens instead of building anything useful.
100x on bitfinex was pure recklessness. half those accounts got liquidated within weeks
100x leverage with no circuit breakers. bitfinex liquidation engine was notorious for hunting stops back then
bakkt ended up doing like 50 btc volume on launch day. physically settled futures nobody asked for, just wall street attempting relevance
That $267B total market cap feels like a different universe now. BTC at $185B of it and alts bleeding for months. The post-ICO hangover was brutal.
that $267B total feels insane now. a single token like SOL can do a third of that on its own in 2026
71% dominance and vc funding at zero. btc maximalists were insufferable that summer and honestly they were right