Bitcoin’s dominance percentage is at 50.9% as of this writing on 12 August 2018 according to data from CoinMarketCap. The numbers are up 15% from May 2018 when the uptrend began. This is the first time since December 2017 that Bitcoin’s dominance percentage has risen above 50%, meaning most of the money invested in cryptocurrency is invested in Bitcoin.
Currently the Bitcoin market cap is USD 109 billion while the overall cryptocurrency market cap is USD 215 billion, which yields the 50.9% Bitcoin dominance rate. Ethereum’s dominance percentage has declined to 15.3%, since the Ethereum market cap is USD 33 billion. In June 2017 Ethereum’s dominance percentage rose to as high as 31.8% at the same time Bitcoin’s dominance percentage decreased to 39.2%, which is the closest Ethereum got to overtaking Bitcoin as the cryptocurrency with the most investment. Since then Ethereum has declined relative to Bitcoin, long term.
The rise of Ethereum’s popularity in 2017, alongside a wave of initial coin offerings (ICOs), most of which are based off the Ethereum blockchain, is the reason Bitcoin’s dominance percentage declined from the 80-90% range. ICOs have taken a big hit as regulators crack down on ICO activity across the world, and Ethereum is simultaneously losing value relative to Bitcoin, resulting in the dominance percentage upswing since May 2018.
It might be healthy for the cryptocurrency market, for Bitcoin’s dominance percentage to continue rising. Bitcoin is the most secure, most widely used, and perhaps the purest cryptocurrency. It truly is the gold standard of the cryptocurrency world. It would make things far less confusing for new investors if other cryptocurrencies continue to decline since it makes it more obvious that Bitcoin is the best investment choice. In general, if funds are diverted from other cryptocurrencies back to Bitcoin, that could fuel a strong Bitcoin price increase long-term which is beneficial for the entire crypto space. Especially since most crypto businesses prefer to transact with Bitcoin.
Since Bitcoin’s dominance percentage fell from the 80-90% range in early 2017, there have been 3 rallies in the dominance percentage. This includes the time when Bitcoin rallied to USD 20,000, and a smaller bump in the dominance percentage during March 2018 before the Bitcoin rally to USD 10,000. The current rally in dominance percentage is much larger than the bump during March and could be a positive sign that Bitcoin is entering a favorable setup for a rally. However, the past data for this sort of phenomena is so scant that using Bitcoin’s dominance percentage to predict price can’t be done with much confidence.
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