Bitcoin (BTC) dominance, which measures the cryptocurrency’s market capitalisation compared to the entire crypto space, has been declining steadily since October 25. At its peak, the dominance rate was 54.3%, but dropped to below 53% by the time this article was written.
What does the decrease in Bitcoin dominance tell us about the overall market? According to Matteo Greco, Research Analyst at Fineqia International, “BTC dominance typically shifts in two key moments of market cycles: after reaching a peak and entering a downtrend, and after reaching a low and commencing a new cycle. The recent shift indicates new investors entering the market, as it follows a long period of market downtrend.” Greco added “The rise of BTC dominance in the last few weeks was due to investors shifting their attention from altcoins to BTC. This is because they were exiting positions on altcoins and focusing their efforts on BTC. The decline in dominance after five consecutive weeks of increase marks the first signs of heightened investor interest in altcoins, suggesting a riskier market stance.”
This riskier stance comes as the Western Bank of England and US Federal Reserve have signalled an end to their harsh fiscal tightening policy. The economy is a great place to start and investors may be more inclined to take a risk with cryptoasset classes that are considered more volatile, despite the narrative of higher rates for longer. Bitcoin’s spot price remains steady, with another percentage point added to the BTC/USDT pair on Tuesday, which was trading at $35,320. This year, Bitcoin has more than doubled its spot price, with a 113% bullish performance to date – far ahead of major global equity indexes.
Which altcoins are gaining on Bitcoin? Ethereum (ETH) has dropped off since the previous week, but Ripple (XRP) is up 13% since the start of the year and Solana (SOL) has seen double-digit gains against BTC. Other major altcoins, such as Dogecoin (DOGE) and Binance Coin (BNB), have also gained in value against Bitcoin. It is also worth noting that Tether’s (USDT) market cap has increased in recent weeks, with total USDT in circulation up from $83.5 to $86.1 billion – a sign of increased investor interest in cryptocurrency markets. As a result, the overall cryptocurrency market cap soared to $1.34 billion as of November 8.