3 reasons why Bitcoin is regaining its crypto market dominance

Bitcoin’s market dominance is regaining strength and has risen in recent weeks to over 50%. The reason for this rise could be attributed to the increasing popularity of Bitcoin Cash, a fork of bitcoin with different technical rules. Another possibility might be that investors are beginning to see value again in BTC as light-hearted altcoins become more popular than they have been before.

The “bitcoin dominance chart” is a graph that shows the percentage of the market share of Bitcoin. The graph has been steadily increasing since its low point in 2018.

Even though it is trading roughly 60% below its record highs, Bitcoin (BTC) is reclaiming its lost crypto market domination.

Bitcoin’s supremacy has reached new highs in the last six months.

On May 27, the Bitcoin Market Dominance (BTC.D) index, which compares BTC’s market capitalisation to the rest of the cryptocurrency market, hit a new high of about 47%, the highest since October 2021.

Daily graphic of Bitcoin Market Dominance. TradingView is the source of this information.

Despite the fact that Bitcoin’s market value has dropped from $1.3 trillion in November 2021 to around $550 billion in May 2022, the dominance index has risen, indicating that traders are more comfortable selling altcoins.

Let’s look at three possible reasons why traders are fleeing the altcoin market for Bitcoin’s protection.

The Ethereum “Merge” story is winding down.

The biggest alternative cryptocurrency by market cap, Ethereum’s native token Ether (ETH), has shown persistent drops in market domination in the previous five months, falling from 22.38 percent in December 2021 to 17.86 percent in May 2022.

Daily chart of Ethereum Market Dominance. TradingView is the source of this information.

The drop follows a two-year rise in which ETH/BTC increased by more than 200 percent between September 2019 and December 2021.

According to Cointelegraph, Ether has outpaced Bitcoin in recent years, owing to the excitement around its long-awaited protocol change, dubbed “the Merge,” which aims to make Ethereum more scalable and affordable.

However, the update, which attempts to convert Ethereum’s blockchain from proof-of-work to proof-of-stake (a counterpart known as Beacon Chain), has been delayed many times.

Martin Köppelmann, co-founder of the Ethereum Virtual Machine (EVM)-compatible Gnosis chain, reportedly mentioned a seven-block rearrangement on the Beacon Chain, implying that the chain “forked” momentarily during its testing period.

Approximately 2.5 hours ago, the Ethereum beacon chain underwent a 7-block deep reorg. This demonstrates that the present node attestation approach should be revised in order to produce a more stable chain! (Proposals are already in the works) pic.twitter.com/BkQrKuUlw1

May 25, 2022 — Martin Köppelmann (@koeppelmann)

Following the announcement on May 25, Ether fell about 13.5 percent against the US dollar, while ETH/BTC fell to 0.059, the lowest level in six months.

The daily price chart for ETH/BTC includes a significant support level. TradingView is the source of this information.

According to OxHamZ, an independent market analyst, Ethereum lacks storylines to propel ETH’s price higher following the Merge update, since investors have already “priced in” the network upgrade hype.

What is the story behind owning ETH after the merger?

All KPIs are in the negative.

Active wallets are at a standstill. The NFT hoopla is gone, and LP trade volumes are declining. In stables, liquidity decreases. L2 cannibalism is on the rise (thanks to @TaschaLabs).

Although the value of ETH has dropped by 50%, the value of its block-space has also dropped.

May 25, 2022, 0xHamZ (@0xHamz)

LUNA equals 0

The fall of the Terra (LUNA) market looks to have contributed to Bitcoin’s newfound crypto market strength.

In May, the value of LUNA/BTC, a financial instrument that measures the Terra token’s power against Bitcoin, plummeted 99.99 percent to 0.00000004, rendering it almost useless.

Meanwhile, LUNA fell in value against the dollar, fueling speculation that traders were selling the token in favor of BTC and cash.

Daily chart of the LUNA/BTC exchange rate. TradingView is the source of this information.

Before the fatal disaster in May, LUNA had a market capitalization of $40.88 billion.

Related: Crypto funds under management hit an all-time low in July 2021

Ded ded ded ded ded ded ded ded ded de

The altcoin market as a whole, which includes everything from large-cap blockchain projects to questionable crypto assets, has dropped roughly 65 percent since peaking above $1.7 trillion six months ago.

Chart of the daily market capitalization of altcoins. TradingView is the source of this information.

A closer examination of several tokens reveals that, unlike Bitcoin, the majority are down over 80% from their all-time highs, indicating a general investor shift away from altcoins and toward cash, stablecoins, or BTC.

DeFi projects and their downside retracement from record highs. Source: MessariSome dead crypto projects so far in 2022. Source: Messari

This is due to the fact that Bitcoin is not only the oldest blockchain, but it also operates independently of any central authority.

The #bitcoin network is not under anyone’s control.

May 26, 2022 — CZ Binance (@cz binance)

Historically, throughout crypto bull markets, Bitcoin’s dominance has dwindled as waves of new coins emerge during the manic period.

The famed initial coin offering (ICO) push, for example, corresponded with BTC.D plummeting from roughly 96 percent in January 2017 to 35 percent in January 2018.

Price of BTC.D on a daily basis. TradingView is the source of this information.

Then came the March 2020 meltdown, which ushered in the DeFi and nonfungible token (NFT) craze, which was aided by the Federal Reserve’s quantitative easing.

As a result, if Bitcoin’s market dominance has bottomed out, it might coincide with a macro bottom in Bitcoin’s price and the start of a new bull market phase in the following months.

The author’s thoughts and opinions are completely his or her own and do not necessarily represent those of Cointelegraph.com. Every investing and trading choice has risk, so do your homework before making a decision.

The “ethereum price” is a cryptocurrency that has been on the rise recently. This is due to 3 reasons, which are Bitcoin’s dominance, the increasing popularity of Ethereum and it’s potential for mass adoption.