• Bitcoin dominance, which measures the ratio of the Bitcoin market cap to the entire cryptocurrency market cap, has risen above 50%.
• Traditionally, dominance falls while market prices are rising in the sector, but this time around it is increasing.
• There are several theories as to why this is a deviation from past behaviour, including regulation and Bitcoin’s increasing separation from other coins.
Rising Bitcoin Dominance
Bitcoin dominance, which measures the ratio of the Bitcoin market cap to the entire cryptocurrency market cap, has clambered back above 50%. The period of relative serenity in the crypto markets recently has seen it rangebound for the last two months at around this level. This marks a surge since the start of this year when it was in the low 40’s.
Unusual Market Behaviour
This rise in Bitcoin’s dominance contrasts with what we have seen in past cycles. In these periods, altcoins have tended to outpace Bitcoin’s gains and hence lead to a fall in dominance. However, this time around that hasn’t happened – making 2023 an unusual year for crypto markets.
Reasons for Deviation
There are a few theories which spring to mind to explain these occurences. Regulation is one factor here – Bitcoin has proven to be more immune than many other coins in the space due to its lack of exposure under securities laws. Another factor could be that Bitcoin is separating itself from other coins and forming its own distinct asset class within digital assets.
It should also be noted that Bitcoin was only launched in 2009 and had minimal liquidity for its first few years – meaning our sample space of data is too short to make assumptions solely based on past performance. Prudence needs therefore needs to be taken when extrapolating past performance into future predictions.
Ultimately, 2023 stands out as an unusual year so far within crypto markets due largely thanks for rising domination by bitcoin and deviation from traditional patterns between altcoins and bitcoin’s gains . While some reasons may have been suggested here for why this might be happening , further research into more data across longer timeframes will help us gain greater insights into how these markets work .