[Wise Crypto Life] 02. Dominance Edition
What is “Dominance”?
Bitcoin and Altcoin
There are as many as 9,000 different types of cryptocurrencies around the world. How many cryptocurrencies do you know? Bitcoin (BTC), the first name that came to mind, is definitely the ‘captain’ who represents cryptocurrency. All other cryptocurrencies except Bitcoin are classified as “Altcoin” in the sense of Bitcoin’s alternative, indicating that Bitcoin is in a class of its own.
Although there are fluctuations, the average price of one bitcoin has been somewhere between KRW 60–70 million, with the most notorious Altcoin, Ethereum (ETH), at a fraction of that figure @ KRW 3–3.5 million per piece. Bitcoin once again has created its own stratosphere where other cryptos cannot even exist in the same space.
What is Dominance?
‘Dominance’ is an appropriate adjective for BTC, as well as its market capitalization in the entire cryptocurrency market. Therefore, the rise in the dominance of Bitcoin means that many people buy Bitcoin, which means that Bitcoin’s status has also risen proportionally. On the contrary, the fact that Bitcoin’s dominance has fallen can be interpreted as a slight decrease in Bitcoin’s influence in the market due to many people buying Altcoin over the much more popular and mainstream Bitcoin.
Bitcoin’s dominance reached more than 90% in 2014, when it was in the early stages of the cryptocurrency market. It was no exaggeration to say ‘cryptocurrency=bitcoin’ at the time. Since then, in 2017, when the cryptocurrency market was on a tremendous rise, Bitcoin’s dominance fell to about 40%, but as the ice age approached, the currency market shrunk overall and it has just begun to rise steadily again to 70%. While various Altcoins have gained popularity as the cryptocurrency market has been booming again this year, Bitcoin dominances have remained below 50% over the past week.
Bitcoin Dominance Decline
Experts are showing conflicting views on the decline in the dominance of Bitcoin. American analyst Tony Spilotro says the Altcoin era is coming soon due to the outlook that funds withdrawn from Bitcoin will move to Altcoin. In fact, Ethereum recently showed a marked rise last week, breaking the reported price. Meanwhile, according to data from the cryptocurrency data analysis firm GlassNode, Bitcoin miners are still not selling Bitcoin, which in turn means Bitcoin has the capacity to rise. The fluctuation of Bitcoin dominance will be a clue to predict what the cryptocurrency market will be like in the future. Please be aware of these changes and maintain a “Wise Crypto” life.