Bitcoin has been the dominant cryptocurrency since its inception in 2009. Its market capitalization has grown exponentially, reaching an all-time high of $1.2 trillion in early 2021. However, other cryptocurrencies are now challenging their dominance.
Ethereum, Binance Coin, Cardano, and Dogecoin have all seen significant growth in market capitalization recently, and some analysts predict that Bitcoin’s dominance could be eroded in the coming years.
Bitcoin Dominance Index
Bitcoin dominance is measured by the Bitcoin Dominance Index (BDI), which compares the market capitalization of Bitcoin to the total market capitalization of all cryptocurrencies. As of March 31, 2023, Bitcoin’s dominance is 43%, down from a high of 70% in 2017. Ethereum is the second-largest cryptocurrency by market capitalization, with a dominance of 21%.
Gareth Soloway, a cryptocurrency analyst, believes that Bitcoin’s dominance will continue to decline as other cryptocurrencies gain ground. He cites several factors contributing to this trend, including the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs), which are primarily built on the Ethereum blockchain.
Gareth pointed out that DeFi has created new opportunities for investors because the protocols allow them to lend, borrow, and trade cryptocurrencies without intermediaries, making the process more efficient and cost-effective, and soon people might start to abandon the king in favor of the alternatives.
Gareth also noted that some cryptocurrencies are focusing on solving specific problems, such as scalability and sustainability. Ethereum, for instance, ditched the proof-of-work consensus mechanism for the proof-of-stake consensus mechanism last year, which is more energy-efficient than Bitcoin’s proof-of-work system. This focus on sustainability could attract environmentally conscious investors and users, further reducing Bitcoin’s dominance.
Technical Analysis
According to Gareth, Bitcoin’s price movement has been characterized by a series of higher highs and higher lows, indicating the start of a bullish trend. He also noted that Bitcoin’s recent price correction has found support at the 50-day moving average, a key technical indicator for traders.
However, Gareth warns that the price could be vulnerable to a major correction if it fails to maintain its current support levels. He suggests that investors closely monitor Bitcoin’s price movements and consider taking profits if the price starts to show signs of weakness. At press time, Bitcoin was hovering around $27,900 with a market capitalization of $539.5 billion.
Source: https://coinpedia.org/altcoin/bitcoin-dominance-hits-critical-level-when-can-traders-expect-altcoin-season/