The core of many analyses and forecasts, the dominance of Bitcoin, has been declining for several months. Before the threat of a low point at 33% of the market – the level reached during the collapse of the cryptocurrency market in January 2018.
The dominance of Bitcoin is defined as the ratio of the market capitalization of the MTC project to the market capitalization of the entire cryptocurrency market. So, if the market capitalization of the Cue Ball is 1 trillion, and the crypto market is worth 2 trillion, then the dominance of the BTC is 50% (1 trillion / 2 trillion).
This ratio is always expressed as the ratio of Bitcoin to the entire cryptocurrency market. Thus, the sum of the dominance of the BTC and the dominance of the altcoin is always equal to 100%.
A look back at Bitcoin’s dominance since 2013
The following chart, available on the Statista platform, shows the dominance of bitcoin since 2013.
Bitcoin dominance, close to 95% in 2013, experienced several waves between 2013 and 2017, after which it plummeted after the peak of 2017. In June 2017, altcoins dominated the market for the first time, and Ethereum became the leader. Then the dominance of Bitcoin decreased to 40%, which roughly corresponds to the current level.
In 2018 and 2019, there was a return of strong Bitcoin dominance. By August 2019, BTC accounted for more than two-thirds of global market capital.
Since the beginning of the year, bitcoin’s dominant position has been weakening. Altcoins and, in particular, the explosive growth of the Ethereum price affected 62% at the beginning of the year. In April of this year, it again fell below the threshold of 50%, which has not happened since March 2019.
Despite the rebound in May-June, today the trend towards a decrease in the dominance of Bitcoin remains. At the time of writing, the dominance of Bitcoin is almost 38%, and the market capitalization of BTC, according to Coinmarketrate.com, below $1 billion.
What about the dominance of Ethereum?
Bitcoin dominance analysis is a binary analysis between BTC, on the one hand, and altcoins, on the other. Thus, as the dominance of Bitcoin decreases, the dominance of altcoins increases. The graph below shows the dynamics of Ethereum’s dominance in the general cryptocurrency market. For the analysis period of 5 years.
Along with the fact that the dominance of Bitcoin has been declining in recent months, the dominance of Ethereum, the leading altcoin, is growing. Today, Ethereum accounts for almost 22% of the cryptocurrency market, whereas at the beginning of the year it occupied only about 12%. The crypto asset is approaching its maximum reached in early 2018 (about 25%).
But the growth of altcoins is also associated with the emergence of new projects with the largest market capitalization, and in particular with such headliners as Avalanche or Solana. Since the beginning of the year, Avalanche has multiplied its market value by almost 80. Since January 1, the market value of Solana has increased almost 700 times. And there is no shortage of examples that may multiply in the future.
In the longer term, the deployment of Ethereum 2.0 may affect the dominance of Ethereum. Some now call the dominance of the two main projects a “two-headed monster”. Bitcoin and Ethereum still account for almost two-thirds of the cryptocurrency market.
What does this mean for the cryptocurrency market?
The more one cryptocurrency dominates, the more influence it has on the price of other cryptocurrencies. The decline in the dominant position of Bitcoin in the long term will lead to a more limited impact of the parent cryptocurrency on the overall market. Today, despite dominating below 40%, the price of BTC still seems to be leading over the price of other crypto projects. This showed a sharp drop last Saturday.
For many analysts who believe that in the coming years Ethereum will catch up with Bitcoin in terms of market volume, such balancing will be useful for the entire crypto market. Balancing will also allow other projects to be evaluated according to their own value propositions, rather than fluctuations in the Bitcoin price.
But this state of affairs did not prevent accumulating both crypto assets by buying dips.
Signs of accumulation during a downturn
Network data shows that whales are taking advantage of the downturn to replenish their chests with BTC coins. This tendency to accumulate funds during a bear market has become a favorite strategy of traders seeking to buy BTC low.
In the midst of the collapse, the President of El Salvador announced that his country had acquired 150 new BTC. On December 4 (the day of the cryptocurrency rollback), El Salvador also bought 100 Bitcoins. According to reports, there are currently 1,270 BTC in the vaults of a small Central American state.
The country where the world’s first bitcoin city will appear is not the only one accumulating cryptocurrency during this period. The address of the third largest BTC holder replenished his wallet with 2,700 new coins.
Over 67,000 Bitcoins were accumulated in three days!
If weak hands liquidate their positions in a panic, whales take advantage of this and buy a fall. The pure principle of communicating vessels. Small traders sell so that large holders can buy at more favorable prices.
In fact, nothing is lost in the cryptocurrency market, everything is transformed, as the wonderful French chemist Antoine Lavoisier would say. Santiment company, engaged in data analysis within the network, in its latest Twitter post well described the appetites of whales in the BTC network:
“On Monday, Bitcoin returned to the mark of 50.1k $, and the whale traders played this drop perfectly. During the price drop to 43.5 thousand . $ addresses owning 100-10 thousand. BTC, we have accumulated another 67 thousand. BTC. after resetting the same amount before the price drops”.
So a logical question arises: will Bitcoin be adjusted again to offer more opportunities for buyers on dips?
In the battle between $42,000 and $53,000, the bulls seem to be gaining the upper hand over the bears as the Cue Ball price remains above $49,000. Holding this mark is important, because in case of its failure, the asset may return to 46,000 – the line that marked the breakthrough of the bullish Bitcoin flag. A red candle in this area can be considered as a downward bend (the 30,000 target is activated).
Crypto expert Michael Van de Poppe holds almost the same opinion:
“Bitcoin follows the script. Rejected at a price of 51.6 thousand dollars. If he wants to get bullish momentum, he needs to stay above 49.3-49.7K, then we can see 53.5K, otherwise a retest of 46K is likely.
It will take time”.
On the other hand, Pentoshi believes that it is necessary to wait for macroeconomic events before making statements about the future price of Bitcoin. He tweeted:
“Markets are looking ahead. The date is December 10th for CPI. 15th for FOMC. By then, the markets will be much clearer.”
But this is about the Cue Ball. And what do you say to that!
Three Arrows buys 156,400 ETH
Hedge fund Three Arrows Capital took advantage of the fall in the Ether exchange rate over the weekend, and bought a cryptocurrency worth $676 million. And this is shortly after its CEO burst into a murderous tirade that the crypt is not a very good investment, because of the prices.
A few weeks earlier, the CEO and founder of the influential cryptocurrency hedge fund Three Arrows Capital gave vent to his anger on Twitter. Zhu Su condemned the exorbitantly high prices for fees in Ethereum.
“Ethereum has abandoned its users, although it has supported them in the past,” he criticizes. He also announced that he was also abandoning Ethereum. Soon after, Zhu Su bought ETN.
Three Arrows Capital and its CEO have not abandoned Ethereum in favor of Avalanche (AVAX), as can be assumed from these furious social media posts. This may be evidenced by a large transaction.
Last Saturday, the prices of cryptocurrencies fell sharply, following the price of Bitcoin. Three Arrows Capital took advantage of this good fortune to make a very large deal.
The hedge fund took advantage of the market and bought 156,400 Ethers for a total of $676.37 million. Nansen Blockchain company noticed the transaction.
After that, Zhu Su confirmed the fact of the investment. But the head of the fund sees no contradiction with his statements last month. He confirms that Ethereum remains “unsuitable” for new participants. But, business is business.
Are you selling ETH? Illiterate solution
But, don’t lose sight of market opportunities like last weekend’s panic. From a financial point of view, investments make sense. The ether dropped below $4,000. He has since returned more than $300.
This investment in Ethereum does not mean that Avalanche is out of the game. Three Arrows Capital remains a player in the blockchain ecosystem and a holder of AVAX shares.
Answering a question on Twitter, Zhu Su strictly excludes the sale of his tokens. As for ETH purchases, there is an obvious rationale here. The executive claims that he “bought this ETH from someone who was financially illiterate enough to sell it this weekend.” Well, at least now everything is clear.