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As of 6 AM on January 27, 2021 (UTC), the price of Bitcoin is at around $31,500. After hitting the new-high of $41,000 in mid-January, Bitcoin is forming a box zone by going back and forth between $30K and 35K over the past week. While Bitcoin is moving within the box, Bitcoin Dominance has continued to decline as shown in the graph below.
Bitcoin dominance remained around 70% in the market of December last year when the price of Bitcoin was hiking toward its new record peak and early mid-January this year. However, over the last two weeks, Bitcoin dominance has continued to decline and became 63%.
According to the graph above, Bitcoin Dominance bottomed out with a steep decline after January 21st. In this post, I would like to talk about where this lost 7% might have gone to.
First of all, let's look at the inflow of Wrapped Bitcoin (WBTC, http://bit.ly/2M1GXrk).
As of the 21st, when Bitcoin dominance was heading towards the lowest point, we can see the inflow of Wrapped Bitcoin (WBTC) has increased significantly. In other words, we can assume that the amount of Bitcoin to invest in ERC-20-based coins, including Ethereum, had increased. We will infer which ERC-20 based coins benefited from this.
The table below shows the top 10 ERC-20 based cryptocurrency projects in which Wrapped Bitcoin is currently investing.
The chart below shows the price changes of representative Defi coins including Ethereum registered on the Coinmarketcap as of the past week.
As of the 22nd, the magnitudes of the change differ for the cryptocurrencies, but all of them have an upward curve, and their prices went up.
We can interpret that a large amount of Bitcoin has flowed into the Defi market, which means that investors believe that there will be an opportunity to make a bigger profit in the Defi market than the current Bitcoin market. Looking at the larger market flow, it could be a piece of evidence that there is a strong belief in the upcoming altcoin bull market while the Bitcoin bull is slowing down.
Watching how much Bitcoin dominance falls and where that flows into is going to be an indicator of where the next boom will take place.
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