In the cryptocurrency world, Bitcoin is king. There is no contest on that and a very good way of measuring this is by looking at the dominance chart. Here, Bitcoin, despite shedding a big chunk over the years, is still the most active and valuable and therefore the most dominant.
As a primer, the market dominance of any digital asset is the ratio of its market cap to the market value of all cryptocurrencies. The ratio is then expressed as a percentage.
At spot rates, Bitcoin commands 64 percent of the crypto market share, the rest is shared by an array of coins including Ethereum, XRP, and Tether (USDT) with the share decreasing as the market cap falls.
Bitcoin Market Cap Falling
Observed and as aforementioned, the market cap of Bitcoin has been decreasing relative to the altcoin market less than three weeks before a halving event that promises to shape trends and perhaps yank BTC prices to new levels.
In the last few months, Bitcoin dominance has fallen from 72 percent registered in early September 2019 to the current level.
Notably, in Q1 2020, the fall has been accelerated. To quantify, dominance dropped from 70 percent in late December 2019 to spot levels meaning during this time, there has been a realignment and despite what many would have expected, traders and investors find more reasons to liquidate the asset or funnel funds to altcoins.
Altcoins are more volatile
The correlation between the two digital asset classes is positive. Bitcoin being the most valuable and the most dominant acts as a base currency in most pairs.
Understandably, traders would rather prefer moving funds in BTC from one crypto exchange to another than using fiat because of complexities. Some don’t support fiat and that is another complications.
But while Bitcoin is preferred, there are altcoins that are potent and stands to gain at a faster pace in the next couple of weeks or months since it is the most volatile.
Altcoins registered stellar performance in the last quarter
A case in point is Binance which has remained resilient and was one of the top performers in the last couple of days.
Ahead of their burning event, the coin strengthened thanks to several factors including the launch of a Binance Futures exchange and the announcement of Binance smart chain would draw demand for BNB.
Others include Tezos (XTZ) with a superior consensus algorithm and adoption—and even support, from leading French agencies, Chainlink (Link) a leading decentralized oracles platform extending smart contracts use case and finding support from Google, or even Monero that is closing the gap and flipping Tron and Dash.
Going forward, it will be interesting to see if BTC dominance will continue to fall after Bitcoin halving and whether miners will prefer to boost the defenses of more profitable Proof-of-Work networks.
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