As Altcoins rise in valuation while Bitcoin faces a major market correction, the dominance index of the leading crypto has been declining. Why is this important?
Bitcoin loses dominance in the crypto market
Before delving into what has happened this year with Bitcoin, it is worth explaining what the importance behind market share is.
In general, market share is used as an index that allows us to observe how the asset, in this case Bitcoin, is doing compared to its competition. In this case, let’s say the crypto market is competing for investors’ attention.
With this in mind, as we previously reported on CryptoTrend, last Thursday Bitcoin’s dominance index hit a low of 49.35% on Thursday, according to CoinMarketCap.
It is relevant to explain that the Bitcoin dominance index measures BTC’s market capitalization relative to the crypto market. Previously, specifically in early 2021, the share or dominance of the Bitcoin crypto market was 70.68%.
Yes, the leading crypto has lost approximately 20 percentage points in just 4 months. Why?
Altcoins gain strength
The question we must ask ourselves is, if Bitcoin is losing power in the crypto market, which crypto is absorbing it?
Let’s start by looking at Ethereum (ETH), being the second largest crypto by market capitalization. In this way, at the beginning of the year, Ethereum had a market share of 10.79%. Currently, the crypto has a market dominance of 14.67%. Therefore, throughout these four months, ETH has gained almost 4 percentage points of the share in the crypto market.
However, the most curious case is that, as we can see in the graph, the participation that is concentrated in other Altcoins has been the one that has experienced the greatest growth.
At the beginning of 2021, the rest of the Altcoins concentrated 10.68% of the crypto market. But, currently, that figure has risen to 18.58%. Consequently, the rest of altcoins have experienced a growth of almost 8 percentage points in their participation within the crypto market.