Bitcoin market dominance continues to decline – and is currently at its lowest level in recent years. According to data from CoinGecko, it now stands at 37.28%.
This was the last time this was low in 2018, during the bear market. It also fell up 33% that year.
Market dominance refers to cryptocurrency’s share of the total limit in the crypto market. The total cryptocurrency market currently stands at $ 2.3 trillion. Bitcoin market capitalization is currently $ 871 billion, down slightly from last November, when it was $ 1.27 trillion.
The reason for this sharp decline is simple: investors are looking at the broader market and investing in stocks like altcoins, ie cryptocurrencies rather than Bitcoin.
Bitcoin is losing interest to many investors because it is not the type of investment that will allow newcomers to the cryptocurrency market ” get rich while speculating. Institutional buyers like MicroStrategy, Tesla, or Square, on the other hand, can still take advantage of large bitcoin purchases as a hedge against US dollar inflation.
Altcoins, however, tend to be more attractive investments for those looking for big, quick gains. Instead, investors turned to memes, whose value has exploded as the Shiba Inu, for example, rose 42,349,900% between January and December. The rise in the value of these coins may help explain the narrowing of bitcoin market share.
Similarly, the growth of decentralized finance (DeFi) and NFTs, none of which are actually on bitcoin, has helped stimulate the rise of competitive cryptocurrencies.
Both DeFi and NFTs operate mostly on Ethereum. ETH, the second largest cryptocurrency by market cap, has a market dominance of 19.27%. Its dominance has slowly increased since the fourth quarter of 2019 as investors have become more interested in DeFi and NFTs.
The growth of these markets also helps explain the rise of Solana, a blockchain that aims to compete with Ethereum. The price of the native Solana cryptocurrency has risen over 11,000% in the past year, making it the fifth largest digital asset by market capitalization.
There are many explanations for the decline in Bitcoin dominance, but that is not bad news for the market alone. This indicates that the growing interest in the crypto universe is broader and less focused on Bitcoin.
