It seems that the last spike experienced by Bitcoin helped the famous virtual currency reach new dominance highs this year. The index that measures Bitcoin’s dominance registered 46.1 percent, a number that has not been seen since December 2017. At that moment Bitcoin was traded around $20,000 dollars.
Bitcoin Dominance Hits 46.1 Percent
One of the most important indexes that measures the strength of the famous virtual currency has reached a new high for 2018 after reaching 46.1 percent. According to CoinMarketCap, Bitcoin reached a market dominance equal to the one registered in December the 21st.
Since the beginning of the year, Bitcoin’s dominance increased 20%, meaning that the famous virtual currency could be working as a hedge when the market falls.
This situation has been caused because the alt-coin market is experiencing a downtrend that is more marked than the one that Bitcoin had since the beginning of the year. Altcoins had a market share of 24,81% in January (when all the altcoins skyrocketed), and now they have a dominance of 21%.
At the same time, Ripple, Ethereum, Bitcoin Cash and Litecoin, important players in the top 10 market, are also experiencing bigger drops than Bitcoin or just falling when Bitcoin grows.
It is important to mark that in August, a Bitcoin ETF may be approved, and consequently, allow new institutional investors enter the market with billions of dollars. Bitcoin is the most important cryptocurrency and the one that will be benefited by new regulatory measures. Other coins, including ICO tokens, have a more complicated situation because, as some SEC officials already mentioned, tokens issued by ICOs are considered securities.
Of course, some investors believe that this metric is not relevant for the market.
WhalePanda, an important crypto influencer in Twitter, explained:
“Stop using Bitcoin dominance as an indicator. As soon as people started with premines/tokens and (BTC) airdrops it became irrelevant. I can create a WP-token, create $1 trillion, sell 1 token for $1 on an exchange and I’m a trillionaire with WP being the dominant coin.”
During the last months, new tokens have been created that do not require mining for producing them, they are just pre-mined or generated. These tokens influence these numbers that are not accurate anymore.
About it, Charlie Lee commented when Stellar (XLM) surpassed Litecoin (LTC) in market capitalization:
Congrats to Stellar on passing Litecoin's marketcap. That said, it really doesn't make sense to compare marketcaps of coins that are "printed", b/c they have an inflated marketcap. Maybe I'm old school, but I only care about decentralized mineable coins.https://t.co/n6va1YWoiD pic.twitter.com/4IMJ7iqg3H
— Charlie Lee [LTC⚡] (@SatoshiLite) July 20, 2018