Bitcoin was the original cryptocurrency, and dominated the space completely for years. But how has this changed with the emergence of so many other cryptos?
Bitcoin is the biggest crypto in the world, by market capitalization. It commands a huge portion of the crypto markets’ trading volume – not to mention a significant amount of the attention focused on the entire industry.
By studying the summative market capitalizations of every cryptocurrency available, it’s possible to reach the overall market capitalization valuation for the complete crypto space.
As a result, the Bitcoin dominance is defined as the ratio between Bitcoin’s market capitalization to the other crypto markets.
Bitcoin was the largest crypto, and one of a small number available, for several years. It’s no surprise that its dominance was nearer to 100 percent than it is at the time of writing this piece. That’s because Bitcoin’s dominance saw a substantial decrease as new cryptocurrencies emerged.
It’s likely that this is connected to the ongoing rise in popularity of ICOs following the creation of Ethereum and the ERC-20 token standard.
Bitcoin dominance is frequently disrupted when altcoins achieve market share relative to Bitcoin (known as “alt seasons”). But Bitcoin dominance isn’t always affected by bull or bear markets directly. Why? Because it’s a ratio – not an absolute term.
So, if Bitcoin drops in price while the wider crypto market follows a similar movement, it’s likely that its dominance will stay the same.
But while Bitcoin dominance is fascinating to discuss, remember this key point: it doesn’t reflect Bitcoin’s true value, particularly due to forked and premined coins that affect the overall market capitalization in an unnatural fashion.
Another vital factor to consider: market capitalization doesn’t equate to an influx of money. Instead, it’s a measurement based on the present market price and the supply in circulation.
Bitcoin’s dominance was around 100 percent when it was the only tradeable crypto available on exchanges. But this has dropped with the sheer variety of other cryptos in circulation. That doesn’t have to be good or bad – it’s just a tool that can provide a clearer perspective on the crypto space’s ongoing evolution.