bitcoin dominance

Bitcoin’s dominance ‘likely peaked’ as altcoins ’start to wake up’ — Analyst

May 2, 2024 Coin Telegraph

Rethinking Bitcoin ‘dominance’ at 51% — A misleading metric?

November 22, 2023 Coin Telegraph

Bitcoin dominance is a largely redundant metric — if you believe BTC and crypto "altcoins" should be in the same category at all that is.

Bitcoin's (BTC) market dominance has traditionally been viewed as a key indicator of its market strength. Currently, the metric is at a multi-year high above 51%.

*Bitcoin dominance. Source: Coinmarketcap.com*

However, a closer analysis suggests that the concept of "Bitcoin dominance" might not be as informative as it seems, especially when considering the broader dynamics of the cryptocurrency market.

Dominance: A misleading BTC indicator?

The term "Bitcoin dominance" refers to BTC's share of the total market capitalization of all cryptocurrencies. While on the surface, it seems to reflect Bitcoin's market strength, this metric largely represents the trading activity between Bitcoin and Ether (ETH), the second-biggest cryptocurrency and the largest altcoin by market cap.

This dynamic can distort the perceived dominance of Bitcoin, especially when major shifts occur within the ETH/BTC trading pair.

That said, ETH's "dominance" or share of the crypto market has remained relatively stable for the past few years around 17% — while the seemingly inverse relationship between BTC.D and ETH/BTC is clearly visible in the chart below.

*Bitcoin dominance (blue) vs. ETH/BTC (orange). Source: TradingView*

The role of stablecoins and "sidelined" capital

Adding complexity to the interpretation of Bitcoin's dominance is the role of stablecoins like Tether (USDT), the second-biggest "altcoin" by market dominance at around 6.3% today.

USDT's market cap growth is often not a direct result of cryptocurrency market activity but rather an influx of what can be termed "sidelined" capital—funds that are essentially in dollars and often waiting to enter the market sooner or later.

Therefore, the increasing market cap of stablecoins like USDT doesn't necessarily reflect an investment in cryptocurrencies, but rather the preparedness of investors to engage or hedge their crypto exposure.

Meanwhile, the share of everything else that's not Bitcoin, ETH or USDT is only at around 25% and falling from multi-year highs of 35% in 2022.

Bitcoin "strength" or Ethereum market dynamics?

Throughout 2023, the narrative of Bitcoin's dominance has fluctuated. While it appeared to regain dominance early in the year, this was more reflective of the ETH/BTC trading dynamics rather than an aggregate market movement.

Similarly, moments when Bitcoin's dominance appeared to wane, as seen with the Shapella upgrade impacting ETH prices, were more indicative of Ethereum's market movements rather than a decrease in Bitcoin's overall market "strength."

Ultimately, the dominance chart may not be the definitive metric for understanding Bitcoin's position in the market. Swayed heavily by the ETH/BTC trading pair, and synthetic dollars, offers a narrow view of the market.

It's important to consider a more nuanced approach to market metrics that encompasses the multifaceted nature of cryptocurrency investments and movements.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Former Goldman Sachs Executive Says Ethereum Is About To Outperform Bitcoin As Crypto Enters Late Spring

November 12, 2023 The Daily Hodl

Crypto Analyst Benjamin Cowen Says Fed Pivot and Altcoin Rallies Won’t Happen Until This Occurs

October 29, 2023 The Daily Hodl

‘Most Brutal Part of the Market Cycle’ Now Unfolding for Crypto Markets, Says Analyst Benjamin Cowen

October 9, 2023 The Daily Hodl

Fakeouts Coming for Polkadot, Cardano, Avalanche and Other Altcoins, According to Benjamin Cowen

July 16, 2023 The Daily Hodl

Here’s When a Massive Altcoin Season Could Kick Off, According to Crypto Analyst Jason Pizzino

June 29, 2023 The Daily Hodl

Bitcoin gets closer to ‘51% attack’ on altcoin market

June 13, 2023 Coin Telegraph

bitcoin dominance

Bitcoin's market dominance index has failed to sustain above 50% since April 2021 — so will this time be any different?

Bitcoin's (BTC) percentage share in the crypto market has risen to nearly 50% in the aftermath of the last week's altcoin market rout.

On June 13, the Bitcoin Dominance Index (BTC.D), which tracks BTC's weight against other cryptocurrencies, reached 49.29%, slightly down from its two-year highs of 49.66% seen earlier this week.

*BTC.D daily price chart. Source: TradingView*

BTC not an "unregistered security"

The surge in Bitcoin dominance comes after the United States' Securities and Exchange Commission's (SEC) lawsuit against the crypto exchanges Binance and Coinbase. In its court filings, the commission accused many leading altcoins, including Cardano (ADA) and Solana (SOL), of being "unregistered securities."

Bitcoin's market share typically rises during high market stress, given that traders view it as the least volatile, non-stablecoin crypto asset than most cryptocurrencies. For instance, at the height of banking crisis in March 2023, Bitcoin's dominance versus altcoins had also rebounded to 50%.

*Altcoins' seven-day performance versus the U.S. dollar and Bitcoin. Source: Messari*

There's also other cues suggesting Bitcoin's dominance could grow further to finally break 50%.

For instance, DWF Labs, a crypto market maker, has reportedly sent millions of dollars worth of non-Bitcoin tokens to exchanges, this potentially adding selling pressure for certain altcoins.

Independent market analyst Stack Hodler also suggests that most crypto hedge funds would first and foremost abandon their altcoin exposure.

But not everyone is bullish on BTC dominance. Fellow analyst Moustache, for example, argues the altcoin market may have bottomed once again as Bitcoin will be unable to break the 50% mark.

#Bitcoin

Is the USDT-Dominance about to fall?

If so, we're in for a massive Altseason.

-Head and Shoulders pattern forming (W)?
-Stoch RSI heavily overbought.

In the last 3 years this has led to an Altseason 4 out of 5 times.

+ Sentiment is in the basement for most = Good. pic.twitter.com/odU5jg8srF
— ⓗ (@el_crypto_prof) June 12, 2023

Bitcoin dominance risks pullback in June

Chart technicals suggest that Bitcoin's dominance can indeed drop in the coming weeks as altcoins rebound.

Most notably, BTC.D has failed to close decisively above the 50%-mark since April 2021, often reversing its gains due to an overbought weekly relative strength index (RSI).

*BTC.D weekly performance chart. Source: TradingView*

Bitcoin now faces a similar scenario with a retest of the 50% level for the first time since last summer. Meanwhile, its RSI hangs just two points below its overbought level of 70.

Therefore, if history repeats, Bitcoin's dominance will decline toward 39% by late 2023 or early 2024.

On the other hand, a breakout here will be key for BTC — to reach levels not seen in over two years. For example, analyst Crypto Rover sees a classic bullish continuation setup with 52% being the next major hurdle if such a scenario pans out.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.