Bitcoin Dominance Drops Below 40%

Some critics argue that Bitcoin is losing its competitive edge, while others believe that altcoin season is near.

Approaching low point

Bitcoin’s market dominance continues to fall. It even hit a low of below 40% this week. That’s very close to an all-time low of 36.7% in January 2018, according to data from TradingView.

Market dominance refers to the ratio of Bitcoin’s market cap to the total crypto market cap.

It is not the first time that Bitcoin’s dominance has fallen in 2021. In May, the percentage had fallen to 40.3% and in September it was approaching the same level.

Bitcoin critic and Europac chairman Peter Schiff tweeted about this on December 29, saying that Bitcoin is “losing its first-mover competitive advantage”.

Bitcoin makes way for the altcoin season

A study by TradingPlatforms suggested the data could signal an impending “alt season”. In the past seven years, the dominance of the altcoin market has tripled from 21% in 2014 to about 60% this month.

Ethererum (ETH) market dominance remains above 20% at nearly $500 billion. In the past year, ETH’s market dominance has doubled from 10%.

In a December 24 tweet, Crypto analyst “Altcoin Sherpa” claimed that the “alt season” has been going on for a whole year. Reference was made to a chart that tracks Bitcoin’s market dominance. The chart suggests that the downward trend could continue.

The influence of institutional investors

It remains to be seen whether institutional investment can once again bolster Bitcoin’s dominance. In a Dec. 28 interview with CNBC, Noelle Acheson, Genesis Trading’s head of market insights, said she could see strong signals that institutional crypto investment growth would accelerate in 2022. She said the growth in the crypto world over the past 12 months has been astonishing.

In October, analysts at JPMorgan said the Bitcoin rally was fueled by an increased focus from institutional investors. They claimed that “these institutional investors seem to be returning to Bitcoin.”

According to on-chain data from Glassnode, Bitcoin’s short-term supply has declined by 32%. Still, long-term holders have added 16% of Bitcoin to their wallets in 2021.

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