Why Bitcoin Dominance Is No Longer Relevant To Crypto
Bitcoin dominance is a metric weighing the top cryptocurrency’s market share against the rest of the crypto space, including Ethereum, Polkadot, Cardano, and other altcoins. For years, analysts used it as a tool to predict divergences between altcoins and Bitcoin.
However, recently, the metric has lost just about all meaning, and could explain why it has done nothing but trend sideways for weeks now on end. Here’s why BTC dominance is no longer a relevant measure in crypto.
Why Bitcoin Remains The Most Dominant Cryptocurrency Today
Years ago, Satoshi Nakamoto designed the first system of peer-to-peer digital cash and the cryptocurrency industry was born. The advent of Bitcoin, also brought with it a revolutionary distributed ledger technology called blockchain.
Bitcoin the asset, secured by cryptography and a consensus mechanism, cannot be duplicated, but the technology it was built on has been adapted in many unique ways since. Ethereum, for example, ties smart contracts to transactions so that decentralized applications can run on the blockchain.
Related Reading | Prepare For Liftoff: Bitcoin Loses Bear Market Trendline Against Altcoins
Thousands of altcoins have since been created that compete for market share with Bitcoin. As the first ever cryptocurrency, BTC enjoyed first-mover advantage and all that comes along with it, including brand recognition, trust, familiarity, and being further along in adoption.
When altcoins gained dominance over Bitcoin in late 2017 and early 2018, the metric became particularly useful for technical analysis and predicting the normally unpredictable relationship between BTC and altcoins.
BTC dominance has been stuck around 60% for weeks on end | Source: CRYPTOCAP-BTC.D on TradingView.com
BTC Dominance: No Longer A Reliable Metric To Measure Crypto
Because altcoins trade against USD and BTC primarily, they don’t always follow the same trends and patterns that Bitcoin does. Analysts had once utilized BTC dominance effectively, but its usefulness has begun to fade. Why? Because digital assets are transcending the definition of what an altcoin is, and BTC dominance cannot keep up with innovation in the market as a metric itself.
What that means is, there’s a sea of coins on decentralized exchanges, an explosion of NFTs, and several other blockchain-based assets that aren’t included in the popular metric.
Related Reading | Why March Is The Bloodiest Month In Bitcoin History
The best example of dominance losing its importance, is due to the fact that altcoins have been performing so well, beating Bitcoin in ROI across most of the asset class, yet the metric remains firm at around 60% where it has now spent several weeks consolidating.
An explosive move could result due to such lengthy consolidation, however, what could instead be happening is the measure losing any remaining usefulness as a tool to gauge crypto market trends.
Featured image from Deposit Photos, Charts from TradingView.com
OhNoCrypto
via https://www.ohnocrypto.com
Tony Spilotro, @KhareemSudlow
