As of last year, when bitcoin — and crypto in general — were riding the wave of exorbitantly high prices, the dominance enjoyed by the world’s leading crypto took a dip as money flowed into altcoins and other crypto tokens.
Indeed, bitcoin’s dominance dropped significantly from 63% in January 2021 to just 42% by May. It then slipped even further to a bottom of 40% during December.
The altcoin bull run that followed bitcoin’s price hike last year was a much-expected and predictable reaction to the currency’s surging value. What wasn’t expected: for bitcoin’s dominance to remain low in a bear market. Bitcoin dominance currently rests at a surprising 38% and there are various factors that are keeping it low compared to the previous bear market of 2018.
Altcoins are stronger and bigger, most notably Ethereum
This will cause consternation among bitcoiners who cheer bear markets for their devastating impacts on anything but their chosen coin. But on relative terms, some altcoins, most notably ether, are doing much better than they did in the previous bear market. In addition, there are many more altcoins than previously.
Ether fell more than 90% from its all-time high of more than $1,300 in January 2018 to end the year at around $83. Currently, ether is down around 73% from November last year, sitting at around $1,230.
Ether’s dominance is also down from its June 2017 peak of 25% to around 18% today. So, although ether dominance isn’t at its bull market highs, it’s still higher than its previous bitcoin bear market lows that were less than 10%.
Stablecoins are huge
An obvious and visible factor keeping bitcoin dominance relatively low is that the stablecoin market has also grown significantly. Tether is the third biggest crypto-token after ether by market cap and currently comprises nearly 8% of the entire crypto market. Next up is Binance’s BNB coin but after that, there’s USDC, which makes up 5% of the market, and then Binance USD.
Bitcoin is losing the safe haven bid to gold
One of the main hallmarks that has always distinguished bitcoin from altcoins is that it’s promoted as a safe-haven asset like gold. This is in contrast to altcoins which are considered to be more speculative in nature.
However, during these times of global turmoil, bitcoin is losing its safe-haven status to gold. Bitcoin is down 62% from the start of the year while gold is only down 1% in the same timeframe.
Is bitcoin no longer cool?
As bitcoin loses its safe-haven bid to gold, what can it be used for other than speculative purposes? Of course, it can be used for money transfers, but stablecoins can be better for such a purpose as they are less volatile.
And on the speculative front, gamblers may be much more enticed by potential altcoin gains than bitcoin’s gargantuan dream of reaching the $100,000 mark. Apparently, bitcoin is losing on many fronts, both to rival cryptos and to more traditional assets like gold.
Only time will tell if the world’s biggest crypto can mount a significant comeback and once again hit the dizzying heights of 2021, but so far that’s looking a long way off.