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DECODING THE CRYPTO MARKET: UNDERSTANDING THE SIGNIFICANCE OF BTC AND ETH
DOMINANCES

Tech Planet Author 2 hours ago Follow


Market dominance is a share of cryptocurrency in the entire market. Recently,
Bitcoin gained over 50% market dominance for the first time since April 2019.
The BTC market dominance index indicates particular market trends and proper
behaviour for many. Let's dig deeper into BTC and ETH market dominance and how
to predict the market trends relying on these indexes.


BTC DOMINANCE HISTORY

Bitcoin is the first-ever cryptocurrency, so in the very beginning, its share
was 90-100%. While the first altcoins merged, Bitcoin's dominance began to
decrease a bit, still remaining the most influential cryptocurrency compared to
the entire market.

In 2015 Ethereum, the second-largest cryptocurrency, appeared, enabling the
creation of numerous decentralized platforms with different functions besides
just transferring value and money in the future. But by then, BTC dominance
remained usual, with no significant changes controlling 90-95% of the crypto
market.

In 2017-2018 the market experienced Initial Coin Offering (ICO) boom when
investors were highly attracted by numerous altcoins and the idea of making huge
profits by funding fresh crypto startups. The boom caused a radical dump in BTC
dominance to an all-time low of 37.64%. After the IPO spike, the crypto winter
came as some investors were dumped, and the crypto market appeared to be a
massive scam for many. By the end of 2018, Bitcoin dominance had recovered to
55%.

2020 appeared to be a game changer for the crypto market as people got stuck in
their houses because of the COVID-19 pandemic, put their money into
cryptocurrencies to avoid inflation losses and played with crypto trading and
using DeFi apps. BTC share gained 70.98%. The next unexpected boom happened in
2021 when NFTs became popular, forcing Bitcoin to lose more of its market share
and drop to 42.8%. Since then, BTC's share only overpassed 50% at the current
moment.




HOW TO USE THE BTC DOMINANCE INDEX IN TRADING

In trading, there are four market states, depending on changing BTC dominance
and its price. Please note those scenarios are potential but not iron, so you
should consider other metrics and determinants while making trading decisions.

 1. BTC price and dominance grow — a signal of potential Bitcoin bull market
 2. BTC price rises, but dominance goes down — a signal of a potential altcoin
    bull market
 3. BTC price fallі, but dominance increases — a signal of a potential altcoin
    bear market
 4. BTC price and dominance fall — a signal of a potential bear state of the
    whole crypto market.

You can use these potential states to adjust your trading strategy or diversify
your portfolio.


BTC DOMINANCE VS STABLECOINS

Stablecoins outstand the whole market as they don't bring extra profits or
losses but only help save the value. When stablecoin's dominance grows, crypto
users withdraw their funds from cryptocurrencies anticipating bearish sentiment
and wanting to fix the value. When the dominance decreases, crypto users feel
bullish about the crypto market and withdraw funds from stablecoins to gain
profits while the crypto market grows.


ETH DOMINANCE HISTORY

Ethereum was launched in 2015, and in the very beginning, its dominance was
23-24%. The main altcoin is inversely proportional to Bitcoin. When BTC share
grows, ETH share goes down and vice versa.

By the end of 2017, the ETH market share significantly dropped to 13.43% but
recovered just in the beginning of 2018 to 23.89%, sitting in the position of
the second largest cryptocurrency. In 2017 the Ethereum Team took steps for
Ethereum blockchain adoption and created the Enterprise Ethereum Alliance,
including ConsenSys, Microsoft, Intel, MasterCard and over 150 companies. So
when BTC experienced an all-time low market share in 2018 caused by sparked
interest in IPOs, ETH gained a strong position by enabling the creation of dApps
and having a utility within the ecosystem.



During the crypto winter, the currency's share went down to 7-10% as crypto
users preferred Bitcoin. ETH dominance recovered once NFTs hit impressive
popularity after May 2021 since Ethereum remains the leading blockchain for
issuing NFTs.

Currently, ETH dominance shows 19-20% of control and surprisingly rises, as well
as BTC dominance.


IN CONCLUSION

Market dominance is a helpful indicator for understanding market trends,
managing a balanced portfolio and adjusting trading strategy. It is simple to
use and understand, so we recommend paying attention to the dominance of
Bitcoin, Ethereum, other altcoins and stablecoins in addition to other metrics
and indicators.

Source: SpectroCoin

CRYPTO BLOCKCHAIN CRYPTOCURRENCY BITCOIN ETHEREUM

In case you have found a mistake in the text, please send a message to the
author by selecting the mistake and pressing Ctrl-Enter.

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