Bitcoin (BTC) is regaining its lost dominance in the cryptocurrency market, trading almost 60% below its all-time high.
Biggest bitcoin dominance in 6 months
The Bitcoin Market Dominance (BTC.D) Index, the metric that weighs the market capitalization of BTC compared to the rest of the cryptocurrency market, rose to about 47% on May 27, the highest since October 2021.
The dominance index rose despite a decline in Bitcoin’s market cap over the past six months, rising from $ 1.3 trillion in November 2021 to nearly $ 550 billion in May 2022, indicating that traders are more comfortable selling altcoins.
Let’s look at three possible reasons for traders to exit the altcoin market to find security in Bitcoin.
The Ethereum “merger” story is cooling
Ethereum (ETH) Native Token, the largest alternative cryptocurrency by market cap, has seen its market dominance steadily decline over the past five months – from 22.38% in December 2021 to 17.86% in May 2022.
The decline comes after two years of steady growth, with ETH / BTC rising more than 200% between September 2019 and December 2021.
As Cointelegraph reports, Ether has overtaken Bitcoin in recent years, mainly due to the hype surrounding its long-awaited protocol update called “Merge”, which is expected to make Etherium more scalable and less scalable.
But the update, which aims to launch the Ethereum blockchain from proof-of-work to proof-of-stack – the equivalent known as the Beacon Chain – has been repeatedly delayed.
Recently, Martin Koppelman, co-founder of the Ethereum Virtual Machine (EVM) compatible Gnosis chain, highlighted a seven-block rearrangement in the beacon chain, meaning the chain was briefly “spun” in its testing phase.
The Ethereum Beacon chain experienced a 7-block deep rearrangement ~ 2.5 hours ago. This indicates that the current authentication policy of the nodes should be reconsidered which will hopefully lead to a more stable chain! (Proposals already exist) pic.twitter.com/BkQrKuUlw1
– Martin Koppelmann (koeppelmann) May 25, 2022
Etherium Beacon Chain 7 2.5 hours ago a deep 7 block rearrangement took place. This indicates that the current node authentication policy needs to be reconsidered for a more stable chain! (Proposals already exist)
– Martin Kopelmann (@koeppelmann) May 25, 2022
Ether is down about 13.5% against the US dollar since opening May 25, while ETH / BTC is down 0.059, the lowest in six months.
Etherium lacks the stories to raise the price of ETH after the merger upgrade, independent market analyst OxhamZ noted, adding that investors have already determined the “cost” of promoting the network upgrade.
What is the ownership of ETH after the merger?
All KPIs are below
Fixed active wallet
NFT hype dead
LP Trading Section Poor Trending
Liquidity shrinks in stability
L2 Cannibalism is increasing (h / t AsTaschaLabs)
ETH is down 50% but the value of its block-space is also down
– 0xHamZ (0xHamz) May 25, 2022
What is the ownership description of ETH after the merger?
All KPIs are inactive
Stable active portfolio
NFT hype is over
LP trading volume with bad trends
Liquidity in the stable decreased
L2 Cannibal Growth (h / t asTaschaLabs)
ETH has fallen by 50%, but the value of its block space has also fallen
– 0xHamZ (@ 0xHamz) May 25, 2022
The moon is at zero
The collapse of the Terra (LUNA) market also gives rise to the renewed power of the Bitcoin cryptocurrency market.
LUNA / BTC, a financial instrument tracking the strength of the Terra Token against Bitcoin, dropped 99.99% to 0.00000004 in May and became virtually useless.
LUNA, meanwhile, fell sharply against the USD, raising expectations that traders would drop tokens to secure BTC and cash.
LUNA had a market cap of $ 40.88 billion before the May crash.
Overall, the altcoin market, which includes everything from large-cap blockchain projects to start-up cryptocurrencies, is down nearly 65% in the six months since reaching the 1.7 trillion mark.
A closer look at some of the tokens reveals that – unlike Bitcoin – most are below 80% of their all-time highs, advising the average investor to move from altcoins to cash, stablecoins or BTC.
The main reason for this is that Bitcoin is not only the oldest blockchain but also stands on its own without any central authority.
No one controls #bitcoin Network
– CZ Binance (cz_binance) May 26, 2022
No one controls the #bitcoin network.
– CZ Binance (@cz_binance) on May 26, 2022
Historically, the dominance of Bitcoin in the crypto bull market has diminished as waves of new tokens erupt in the frenzy phase.
For example, the duration of the infamous Initial Coin Offering (ICO) pump BTC.D dropped from almost 96% in January 2017 to 35% in January 2018.
Subsequently, the March 2020 crash was the beginning of the DeFi and Non-Fungible Token (NFT) hype, driven by the quantitative easing of the Federal Reserve.
So, if the dominance of the Bitcoin market really reaches the rock bottom, it could re-align to the macro bottom of the Bitcoin price, and perhaps a new bull market phase will begin in the coming months.
The opinions and opinions expressed herein are those of the author only and do not reflect the opinions of Cointelegraph.com. There is a risk involved in every investment and trade movement, you should do your own research when making decisions.