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Bitcoin still maintains a majority dominance in the market when it comes to cryptocurrencies. Almost half of all crypto market share is owned by BTC. Although still in the lead, the margin by which bitcoin dominates the market has continued to decline. Altcoins are taking more and more market share. Their growing value means that more investors are putting money into them. Take money that they would have put in BTC to put altcoins. Hence, taking market share from bitcoin and giving it to altcoins.
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The altcoins that are gaining more market share are due to the increasing demand for other cryptos besides BTC. Indeed, the price of digital asset has increased so much in recent years that it seems too expensive to invest. Parts like Ethereal have gained a larger market share. Almost 20% now, and at some point, reaching up to 30%.
How Market Dominance Affects Cryptocurrencies
The market dominance of various cryptocurrencies is calculated by their market capitalization. It really comes down to the value of the individual coin. Where does market dominance come from? Bitcoin currently maintains the highest market capitalization of any cryptocurrency. Put it before all other cryptos. This is why its market dominance is high. Right now, the market dominance of BTC stands 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 bullish rally of 2017-18. BTC market dominance has dropped from over 95% to 35% at an all-time low. This was mainly due to the fact that Ethereum took more market share.
The decrease in BTC dominance has resulted in what the market affectionately calls “altcoin season”. Altcoin prices have been on the rise as alts have reduced bitcoin’s market share. This was really the turning point for altcoins. Investors have started to see value in these BTC alternatives. And the market took a life of its own.
What Bitcoin’s Current Dominance Indicates
The current dominance of bitcoin shows that altcoins are on the rise again. The resumption of dominance that BTC has maintained over the past few years has waned with the current bull market. New altcoin technology is making investors favor alt over BTC.
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An important driver of this adoption is the “search for the next bitcoin”. The current price of BTC is proving too high for investors. So, many 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 while waiting for assets to reach new all-time highs.
The decreasing dominance of the market does not have a significant impact on the price of BTC itself. It only indicates that altcoins are becoming more valuable. BTC is currently trading above $ 48,000. While firmly maintaining its grip as the most valuable cryptocurrency in space.
Featured image from The Michael Teachings, chart from TradingView.com
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