The total value of bitcoin makes up only 39.51% of the entire crypto market. This is now eerily close to the lowest point ever, which dates back to early 2018.
What is Bitcoin Dominance?
Market dominance refers to how large the share of bitcoin is in the crypto market. You can express this in euros, but because we are talking about numbers with far too many zeros, it is more practical to express this in a percentage.
At the moment 39.51% of the crypto market consists of bitcoin, the rest is all other coins, including stablecoins.
An all-time low could mean an altseason like never before may be ahead. We are not there yet, for that the dominance still has to fall by about 4 percentage points.
The yellow bar served as support for dominance in 2021, but around the turn of the year, dominance broke out here for the first time at the bottom.
Why Bitcoin is on top
Over a decade, Satoshi Nakamoto designed the first peer-to-peer digital money system and the cryptocurrency industry was born. The arrival of bitcoin also gave birth to blockchain.
Bitcoin is secured by cryptography and a consensus mechanism and cannot be duplicated because of this, but the technology on which it is built has been applied in many unique ways since then. For example, Ethereum links smart contracts to transactions so that decentralized applications can run on the blockchain.
Since then, thousands of altcoins have been born competing with bitcoin for market share.
Bitcoin has the first mover advantage, the advantage of being the very first. But gradually you saw that more and more altcoins took market share from bitcoin. Before 2017, bitcoin accounted for a whopping 95% of the entire cryptocurrency market, but this fell to a low of 35% less than a year later. This was during the greatest altseason ever.
Bitcoin dominance became an indicator in itself and many analysts used this to fill their crystal ball.
As you can see in the chart above, at the beginning of 2018, the dominance was only 35.38%. A piece of cake compared to a year before.
Once the altcoins had worn off and the bear market really kicked in, bitcoin’s dominance climbed to 70%.
descending triangle
If we now commit the same sin as the 2017 analysts, and take the dominance as an indicator, we see a potential descending triangle. If the dominance erupts at the bottom of the triangle, the theory dictates that the size of the triangle’s opening is the same size, allowing the dominance to drop even further.
In the worst case, Bitcoin’s dominance drops to 32%, which is the all-time low. If you only have bitcoin, then that sucks of course. But for anyone with altcoins, it’s time for a Lambo.
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