As the Market Bleeds, Bitcoin Dominance Hits Seven-Month High

Bitcoin has traditionally dominated the cryptocurrency market throughout downturns. 

Bitcoin Dominance Rallies 

Though the crypto market seems weak, Bitcoin is proving that it’s nonetheless “the King.” 

The primary cryptocurrency has seen its market cap dominance soar this week, rising to 45.27% Thursday. Bitcoin’s dominance over the market final topped 45% in October 2021, weeks earlier than it hit an all-time excessive above $69,000. 

Market cap dominance refers back to the proportion of the market one asset represents. Bitcoin has traditionally been dominant throughout bear cycles, however it tends to make method for different belongings resembling Ethereum in bullish market situations. Bitcoin’s dominance topped 70% shortly after it broke $20,000 for the primary time in December 2020, however then confronted a bleed all through a lot of 2021 as different belongings soared. Bitcoin’s dominance has been rising all through this yr and has rallied over the previous week. 

The crypto market has had a shaky month up to now, with the worldwide market cap plummeting from round $1.8 trillion to $1.3 trillion. Amid the volatility, Bitcoin’s efficiency has been weak. The primary crypto posted its eighth consecutive weekly shut within the pink this week, an unprecedented drop-off even by crypto requirements. Per data from TradingView, it’s at present buying and selling at round $29,800, falling wanting the essential psychological degree above $30,000. 

Though Bitcoin has had a tough spell over current months, true to bear market kind, many different decrease cap belongings have fared a lot worse, which explains why its dominance is hovering. Lots of the so-called “various Layer 1” networks that boomed in late 2021 have suffered big losses amid the stoop. Solana, for instance, is 80.1% wanting its all-time excessive, buying and selling at round $52.23. Avalanche, one other relative newcomer within the sensible contract house, noticed big positive aspects late final yr, however has additionally declined in current weeks. It’s 79.3% wanting its peak, buying and selling at about $30.16. Terra, one of many strongest performers of 2021, has additionally been worn out following its devastating loss of life spiral final week. 

Curiously, Bitcoin’s dominance elevated as Terra began to break down. The market was shaken by volatility over the course of the week, briefly inflicting USDT to lose its peg and panic-induced sell-offs throughout the board. Whereas Bitcoin was shaken through the occasions, it’s held up comparatively effectively in opposition to different belongings. 

Bitcoin’s market cap is at present round $567.9 billion. Now in its seventh month of downward value motion, it’s about 57% shy of its all-time excessive. 

Disclosure: On the time of writing, the writer of this piece owned ETH and several other different cryptocurrencies.