MCS | Bitcoin Dominance?

MCS | Bitcoin Dominance?

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Greetings from MCS, the derivatives trading platform where traders ALWAYS come first.

First, let's start with the definition of the word "dominance".

Dominance: a noun with the meaning of ascendancy, power, and authority, and is close to supremacy and superiority.

Bitcoin Dominance is the ratio of the total market capitalization of cryptocurrency to the market capitalization of Bitcoin. In other words, it indicates how much dominance Bitcoin has in the entire cryptocurrency. As of 9 AM on Jan 19, 2021 (UTC), the cryptocurrency market currently has a market cap of about USD 1,058 Billion. Of these, the market capitalization of Bitcoin is about USD 695 Billion, representing 65.4% dominance of the total cryptocurrency market. (Based on Coinmarketcap.com)

What made Bitcoin Dominance into one of the major market indicators? What can we interpret from it?

What is going to happen to the market when Bitcoin Dominance rises?

What is going to happen to the market when Bitcoin Dominance falls?

First, the chart below shows the changes in Bitcoin Dominance, the leader of the cryptocurrency market, and Ethereum Dominance, the leader of altcoins (excluding Bitcoin), over the past 3 months.

Source: Coinmarketcap.com

Over the 3 months, Bitcoin Dominance showed a repeating rise and fall in the 60% range. On the other hand, Ethereum Dominance continued to rise and fall in the 10% range. Among the changes in the chart above, you can find interesting things by looking at the changes in the two dominances highlighted in the red boxes.

When Bitcoin Dominance went down, Ethereum Dominance went up relatively, whereas when Bitcoin Dominance went up, Ethereum Dominance moved sideways or declined.

While the above dominance changes were taking place, what has happened to the total cryptocurrency market capitalization and the prices of Bitcoin and Ethereum?

Source: Coinmarketcap.com
Source: Coinmarketcap.com

When we look at the above two charts, the total cryptocurrency market cap has risen significantly over the past three months along with Bitcoin and Ethereum. In the overall bull market, the dominance changes of the two cryptocurrencies created a certain pattern for the price of Bitcoins and altcoins excluding bitcoins.

We can summary the pattern as follows:

Bitcoin Dominance went up,

  • The price of Bitcoin went up, and the prices of altcoins including Ethereum also increased;
  • The price of Bitcoin moved sideways, and the prices of altcoins including Ethereum declined;
  • The price of Bitcoin fell, and the price of altcoins including Ethereum dropped significantly.

Bitcoin Dominance went down,

  • The price of Bitcoin went up, and the prices of altcoins including Ethereum increased significantly;
  • The price of Bitcoin moved sideways, and the prices of altcoins including Ethereum rose;
  • The price of Bitcoin fell, and the prices of altcoins including Ethereum fell.

With the above pattern, Bitcoin Dominance has influenced the market.

Predicting the next market moves by keeping an eye on the changes in Bitcoin Dominance and the market price trend will be helpful for your cryptocurrency investment.

Traders ALWAYS come first on MCS.

Thank You.

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