Researcher finds that Bitcoin's domination of the crypto market is over 80

A study by John-Paul Thorbjornsen found that although the percentage of bitcoins in the total ecosystem of cryptocurrency is slightly above 50%, its dominance in this market far exceeds 80% of the market. This, if we are in a dominant position, we include factors other than market capitalization.

Thorbjornsen revealed that the crypto-currency's flagship market capitalization was not a good measure to measure its dominance in the market. In particular, various space badysts have pointed out that market capitalization could easily be manipulated because it was simply the market price of a crypto multiplied by its outstanding offer.

Operators behind a crypto can, as such, manipulate its market capitalization via its supply, through pre-mines, etc. To make better use of BTC's dominance, Thorbjornsen used the Pareto principle.

This principle, also known as the 80/20 rule, states that in most cases it should be badumed that 20% of cases are responsible for 80% of the results. In this case, this would mean that 20% of the encrypted currencies should dominate 80% of the market.

In his research, Thorbjornsen examined the top 100 market capitalization crypto-currencies on a log scale, and found that their trading volumes did not fit well. Some of the chips reviewed had even less than 0.1% of the daily trading volume of the crypto market, suggesting an artificial market capitalization.

Volume weighted cap

The researcher then multiplied the volume of cryptos by market capitalization, creating a new metric that he called "weighted cap in volume". He then discovered that there was a power law distribution between them and removed the lower cryptography of what he called a "page 1 effect" badociated with the attention chips on the first page of CoinMarketCap.

Using this new measure, he discovered that Bitcoin's dominance of the crypto-currency ecosystem far exceeded 80%. He noted:

In fact, by simply taking into account the Top 5 parts, Bitcoin (the 20%) seizes more than 85% of the market – it is therefore a Pareto distribution, and in fact much more powerful. This testifies to the strength of the Schelling point around Bitcoin.

He concluded, as such, that the "bitcoin dominance" presented on CoinMarketCap and other cryptocurrency data aggregators is "imperfect, because it does not take into account liquidity. This means, in his words, that the 55% dominance is "considerably underestimated".