Bitcoin Dominance Reaches Highest Level in 2 Years, Impact on Altcoins
The price of the largest cryptocurrency struggled to surpass the $30,000 threshold on the first day of the weekend, while an important Bitcoin (BTC) metric, Bitcoin dominance, reached its highest level in the past 2 years. According to the data provided by Tradingview, the BTC.D chart, which shows the share of Bitcoin from the total value of the cryptocurrency market, is currently above the 52% threshold. With the current data, the Bitcoin dominance rate (BTC.D) reached 52.72% on October 21, reaching the level last seen in April 2021.
Significant Increase in Bitcoin Dominance
BTC.D, which was at 38% at the beginning of the year, reached 52.72% on October 21, reaching the highest level seen since April 2021. This increase in BTC.D occurred as Bitcoin’s price increased by 81% since the beginning of the year, despite occasional interruptions.
Crypto researcher Rebecca Steven stated that the increase in BTC.D indicates that Bitcoin is holding strong under current market conditions and reflects its performance as the best-performing asset for most of the week. Stevens said, “High inflation, geopolitical risks, and the increasingly polarized US government are putting pressure on investors who want to minimize risks.” She added, “Meanwhile, the approval of a spot Bitcoin ETF is closer than ever, and in a way, Bitcoin is serving as an ideological protection against uncertainty on the world stage, helping it gain more dominance in the cryptocurrency market.”
Impact of the Increase in Bitcoin Dominance on Altcoins
Bitcoin dominance, in other words, Bitcoin dominance, represents the share of Bitcoin in the total market value of the cryptocurrency market. This ratio indicates how dominant Bitcoin is compared to altcoins. Bitcoin was first introduced to the market in 2009 as the first cryptocurrency and is considered the pioneer of the cryptocurrency world. Therefore, the market value of Bitcoin usually constitutes a significant portion of the total market value of altcoins.
Bitcoin dominance is usually expressed as a percentage (%). For example, if the Bitcoin dominance rate is 60%, it means that Bitcoin’s market value represents 60% of the total cryptocurrency market value. This ratio provides information about the balance and dynamics of the cryptocurrency market.
The Bitcoin dominance rate is seen as a useful indicator to understand the overall health and trends of the cryptocurrency market. For example, a decrease in Bitcoin dominance indicates that altcoins are receiving more attention and investors are diversifying their portfolios. Conversely, an increase in Bitcoin dominance may indicate that investors are increasing their confidence in Bitcoin and allocating more resources to it.
However, the Bitcoin dominance ratio alone does not explain all the dynamics of the cryptocurrency market. The cryptocurrency market is constantly changing, and many different factors can affect the Bitcoin dominance ratio. Therefore, investors and analysts use multiple indicators and carefully analyze the market to understand the cryptocurrency market.