Why is bitcoin dominance falling right now?

Pourquoi la dominance du bitcoin chute en ce moment ? On vous explique tout !

As the entire crypto market exploded upward in 2021, Bitcoin’s dominance continued its steep decline. During the 2022 crop market, analysts expected to see BTC dominate again and rise again, as it did during the 2017 crop market.

But this time around, the money has decided to flow mainly to the top 100 altcoins and other emerging tokens. Why this new trend?

Why is BTC’s dominance falling from 2021?

During last year’s bullrun, Bitcoin’s dominance dropped significantly, from 63% in January to just 42% in May. The latter continued its downward trend and found its bottom around 40% in December 2021.

L’altcoin season (uptrend on altcoins) which followed the rise of Bitcoin last year was a much expected and predictable reaction. We could also see a great similarity between the seasonality of 2017 and 2021. The unpredictable aspect was bitcoin dominance is still weak in a bear market, which has never happened before. Bitcoin’s dominance is currently around 40% and several factors are keeping it there (compared to the previous bear market in 2018).


Bitcoin Dominance (BTC.D) – Source: TradingView

Ethereum and alts are even more capitalized than ever

Do not please these words Bitcoin maximalists who enjoy the disastrous bearmarket on altcoins. But when we compare the 2018 and 2022 clutch market, it has nothing to do!

Ethereum and a good number of alts are doing much better than in 2018. The number of new tokens has also exploded, increasing the dominance of alts in the total crypto capitalization. ETH fell over 90% from its all-time high of $1,300 in January 2018. It ended the year at around $83. Currently, Ehtereum is down about 73% since November of last year. It is currently around $1,290.

Ethereum’s dominance is also declining, from 25% in June 2017 to around 18% today. While ETH’s dominance has not returned to its previous market highs, it is still higher than previous lows (unlike Bitcoin’s falling dominance since 2017). Ethereum’s dominance fell below 10% during the 2017 crop market.

Stablecoins capitalization is exploding!

It is one of the main and visible factors that keep BTC dominance low significant growth stable tires. Tether (USDT) is the third largest cryptocurrency after ETH by market capitalization. Currently, it alone represents almost 8% of the crypto market. We also find BNB Binance in 4th place. It should be noted that the USDC, in 5th place, represents almost 5% of the market.

Bitcoin seems to be losing its “safe haven” status.

One of the main distinguishing characteristics of bitcoin from altcoins is that it looks fundamental safe investment (like gold). It is the opposite for altcoins, which are considered much more speculative in nature. It makes sense, they don’t have the same fundamentals as BTC and are even more volatile.

In this period of economic crisis, the Bitcoin its status as a safe haven seems to have been lost in favor of the Gold. BTC has lost 62% since the beginning of the year, while gold has only lost 1% in the same time.

Bitcoin is out of fashion?

If Bitcoin seems to be it lost its status as a safe haven, what can it be used for today? Can it be used for other than speculative purposes?

Of course! Its essence has not changed and probably never will. It can be used for money transfers and as a store of value. Currently, the entry points for the future bullrun of 2024 are excellent prices. But no one has the famous crystal ball. The market is still uncertain at the moment and stablecoins are more suitable for making transfers and fencing (because they are less volatile).

From a speculative perspective, investors may be good more that attracts at the potential gains from altcoins during the next bullrun. In fact, the dream of seeing Bitcoin reach and surpass the $100,000 mark is still far away. Only time will tell.

To learn more about the future of the crypto market and Bitcoin in 2023, read our article:

What are the improvements in the Ethereum upgrade?

What are the improvements in the Ethereum upgrade?

Shanghai : la prochaine mise à jour de Ethereum prévue pour mars 2023 ?

The next update to Ethereum will be called Shanghai