The movements of altcoins depend on those of the leading cryptocurrency, whose dominance stands at 46.39%. It rises during bullish runs, as people bet on it as the most traditional currency.
The dominance of Bitcoin over altcoins grows alongside the recent rise in its price. The value of the first cryptocurrency on the market fell from USD 42,000 to USD 37,000. However, its performance remains high compared to the previous months, which stagnation and low volatility marked.
Predicting the direction of the price of Bitcoin is complex, but websites like that of EQI say it could resume the rally. However, its price continues to lose ground, which could cause a sell-off.
There is no certainty about the current price of Bitcoin, but the increase in its supremacy over the other cryptocurrencies is evident. The growth of the pioneering cryptocurrency in this period has allowed it to reach the highest dominance since May 21st. On that date, it was at 50.33%, from where it fell. In recent days, it reported a level of 49.36%, which indicates that it is recovering.
What the Dominance of Bitcoin Represents in the Market
The dominance of Bitcoin allows estimating the level of importance of the cryptocurrency in this market. As it is the first cryptocurrency, it stands as a leader, so altcoins depend on its movements. In other words, the rise or fall of the price of Bitcoin quickly infects the entire market.
The dominance of the pioneering cryptocurrency stands at 46.39%, which means it is high, according to data from TradingView. The second cryptocurrency behind Bitcoin is Ether, which occupies 18%.
This index tends to decline historically due to new projects that capture the attention of crypto enthusiasts. The strengths of other blockchains, such as scalability and better fees, lead some users to exchange their Bitcoin for other cryptocurrencies.
However, it is unlikely that another cryptocurrency will succeed in displacing the dominance of Bitcoin. The reason for this is that the community regards the crypto asset as a store of value. The number of Bitcoin users has grown steadily since June, from 100 million to 200 million.
The Bitcoin Dominance Index Rises at Certain Times
The dominance of Bitcoin in the market tends to decline as other cryptocurrencies mature. However, it rises again during some bullish runs, as people play it safe and bet on the most traditional cryptocurrency: Bitcoin.
During the bullish run of late 2020 and early 2021, the Bitcoin dominance index reached 72.70%. In other words, that of the other cryptocurrencies as a whole was 27.30%. During periods of low volatility, like now, people look for ways to keep up with the growth of their capitals. For example, they turn to DeFi or trade cryptocurrencies to achieve that goal.
The growth of the dominance of Bitcoin could suggest that its price is preparing to climb. Although the current price remains in a bearish state, it could be a simple correction.
By Alexander Salazar
