Bitcoin still maintains majority market dominance when it comes to cryptocurrencies. Almost half of all crypto market share belongs to BTC. Although still in the lead, the margin by which bitcoin dominates the market has continued to decline. Altcoins are taking up more market share. Their increasing value sees more investors putting money in them. Taking money they would have put in BTC to put in altcoins. Hence taking market share from bitcoin and giving it to altcoins.
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Altcoins gaining more market share have been due to increasing demand for other cryptos besides BTC. This is because the price of the digital asset has risen so much in the past years that it looks too expensive to invest in. Coins like Ethereal have gotten a larger bite of the market share. Almost at 20% presently, and at one point, hitting as high as 30%.
How Market Dominance Affects Cryptocurrencies
The market dominance of various cryptocurrencies are calculated by their market cap. This really comes down to the value of the individual coin. Where the market dominance is gotten from. Bitcoin maintains the highest market cap of all cryptocurrencies currently. Putting it ahead of all other cryptos. This is why its market dominance is high. At present, the market dominance of BTC sits at 44.5%.
BTC dominance has declined to 44.5% | Source: Market Cap BTC Dominance on TradingView.com
Altcoins have been encroaching on this number since the last bull rally of 2017-2018. BTC market dominance took a nosedive from over 95% down to 35% at its lowest. This was mostly driven by Ethereum eating up more market share.
The decrease in BTC dominance brought about what is fondly known in the market as “altcoins season.” Altcoins prices saw a surge as the alts cut out more market share from bitcoin. This was really the turning point for altcoins. Investors began to see value in these BTC alternatives. And the market took on a life of its own.
What Current Bitcoin Dominance Indicates
The current bitcoin dominance shows that altcoins are once again on the rise. The recovery in dominance that BTC has maintained over the last few years has declined with the current bull market. New altcoins technology has investors favoring alts over BTC.
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A significant driver of this adoption is the “search for the next bitcoin.” The current price of BTC proves to be too high for investors. So a lot of investors have now turned their attention to finding the next BTC. The low price of altcoins also means that investors can accumulate a good number of coins in wait for the assets to hit new all-time highs.
The declining market dominance has no significant impact on the price of BTC itself. It only points to altcoins becoming more valuable. BTC is currently trading above $48K. While firmly maintaining its hold as the most valuable cryptocurrency in the space.
Featured image from The Michael Teachings, chart from TradingView.com