What does Bitcoin Dominance Mean?
Bitcoin dominance is used to measure the percentage of the cryptocurrency market that can be attributed to Bitcoin, BTC. During prolonged market shifts, it can also highlight whether demand for Bitcoin is staying above that of the cryptocurrency market average. Bitcoin dominance often declines when altcoins and Ethereum are rising in value, and increases when investors are looking for less volatile crypto assets.
Between February and June of last year, for example, Bitcoin’s market share halved from over 85% to 37%.
Although Bitcoin’s value nearly trebled during this same timeframe, other cryptocurrencies also received investor attention: Ethereum’s value went from representing 17% of the entire crypto market to 31%.
Bitcoin is the ‘gateway coin’ for a lot of investors; they buy Bitcoin BTC before purchasing other coins. This can be in part because of its near-universal listing on every active cryptocurrency exchange, but also because of its high-profile and low volatility (which is something of a relative statement).
Most people have heard of Bitcoin. Data collected by Google Trends highlights that although Internet searches on the platform have fallen since January, ‘bitcoin’ has been searched almost five times more frequently than ‘cryptocurrency’, even in the past 90 days.
This visibility, together with the Bitcoin price and position in the crypto markets, is total market dominance.
A lot of experts predict that Bitcoin is still a rock solid investment that will pay off in the long run, while we can expect more of the same rollercoaster ups and downs in the short term. Bitcoin news is an artform in itself and you need to make sure you know what’s coming next in terms of cryptocurrency regulation, cryptocurrency exchange news and in-depth crypto market analysis.
According to CoinMarketCap, BTC dominance is now 42.6% of the cryptocurrency market, its highest since April 15th. Its increase has occurred at the same time as the market’s total value experienced a downtrend, so the Bitcoin Dominance can increase as the market cap actually drops.
Since the 9th of June, cryptocurrency’s total market cap has fallen by around 25% from around $340bn to its present valuation of $256bn: a near $100bn loss. It was a brutal time for the entire cryptocurrency market, but in the same time BTC dominance has risen by 3% in the past two weeks and by around 4% since the beginning of the month. In terms of market share, these are good times.
Although bitcoin has experienced a price decline, falling, over the same time period, from $7,603 to $6,600, it is below that of the market in general, suggesting investors are moving to buy Bitcoin BTC over other cryptocurrencies. The Bitcoin price is less of a concern. It is simply a safe haven when the seas get choppy in the cryptocurrency market.
When the crypto market enters a bearish trend, Bitcoin BTC dominance often increases. Its relatively low volatility means investors can maintain (some) value with their funds. During crypto market declines, this makes it a convenient asset for investors looking to keep their money in the cryptocurrency market, but wanting to minimize risk.
And for those who have the stomach, there’s always Tether.
The author is invested in BTC and ETH, which are mentioned in this article.