Bitcoin Markets Dominance reaches 17-month high
Bitcoin’s market share only briefly topped 60% at the end of 2017, before which it had not been this high for two years.
Bitcoin markets dominance has risen to 59%, almost touching the 60% mark in recent days. The #1 digital asset has not enjoyed this market share for any length of time for two years.
Bitcoin briefly rose above the 60% dominance mark twice at the end of 2017, as speculative frenzy drove the price up to $20,000. Since then, it fell sharply, essentially halving in the course of around five weeks as the bubble burst, before recovering slowly through the bear market.
Dominance is simply the proportion of overall market cap occupied by bitcoin, but it can be a useful measure of wider confidence in bitcoin compared to other digital assets. For most of Bitcoin’s history, dominance remained above 80% – since few altcoins gained significant traction in the early years. This changed early in 2017, as an explosion of interest in cryptocurrency drove money into altcoins and other assets.
Consolidation and ‘Alts Season’
Bear markets usually see funds consolidate away from altcoins, which are seen as riskier, into bitcoin, which is seen as safer. When confidence returns to the market, it usually returns to bitcoin first and foremost – the original, largest and most trusted digital currency. When bitcoin’s price starts to rise, traders sell alts to profit from BTC’s gains, increasing dominance more.
Ultimately, this leads to altcoins becoming oversold. Then, when bitcoin traders take profits, they pour money into the altcoin markets. Since the orderbooks for alts are thinner and the markets more illiquid, this can lead to huge rises in a short time – the so-called Alts Season.
To date, this has not occurred, since traders are still waiting to see how the situation with bitcoin develops. This is despite several prominent analysts have already stated it may already be underway – including Fundstrat’s Tom Lee.
‘Since 2015, one of the “pre-conditions” for the start of alt-season is a drop in the correlation between Alts and $BTC
This drop in correlation has started recently (lower part of chart and scale is inverted)… past alt-seasons averaged 1,100% gains’