Bitcoin dominance is the status of Bitcoin as the most prominent digital currency. It’s a measure of the percentage of total market capitalization that Bitcoin represents.
For example, if Bitcoin’s market cap is $100 billion and the total market cap of all digital currencies is $200 billion, then Bitcoin’s dominance is 50%.
Bitcoin’s dominance has fluctuated over the years. In early 2013, it was around 80%.
But as other digital currencies rose in popularity, Bitcoin’s dominance fell to around 40% by early 2017. Since then, it has trended upward again and reached 70% by early 2019.
Why does Bitcoin’s dominance matter? Because it shows how much influence Bitcoin has on the overall market. When Bitcoin’s price goes up, the prices of other digital currencies tend to follow suit.
And when Bitcoin’s price falls, the prices of other digital currencies usually go down as well.
So, what is driving Bitcoin’s renewed rise in dominance? There are a few factors:
1) Increased institutional interest in Bitcoin. More and more large financial institutions are buying Bitcoin and investing in cryptocurrency-related projects.
This institutional money is helping to drive up the price of Bitcoin and increasing its dominance.
2) The rise of altcoins. While altcoins are still far behind Bitcoin in terms of market cap, they have been gaining ground recently. This is due in part to the increased interest in cryptocurrency from retail investors.
As more people buy altcoins, their prices go up and this increases the total market cap of all digital currencies. This, in turn, helps to increase Bitcoin’s dominance.
3) The fall of fiat currencies. Fiat currencies like the US dollar and Euro are losing value as inflation increases.
This is causing more people to invest in Bitcoin and other digital currencies as a store of value. As demand for Bitcoin increases, so does its price and dominance.
4) Regulation uncertainty. Regulatory uncertainty surrounding digital currencies has been a major hindrance to their growth. However, this is slowly changing as more countries are starting to clarify their position on cryptocurrencies.
As regulation becomes more certain, it will help to boost confidence in digital currencies and increase their adoption rate. This will eventually lead to higher prices and increased market dominance for Bitcoin.
5) Network effects. Network effects play a big role in why Bitcoin is so dominant.
Because it was the first cryptocurrency, it has the largest network of users, businesses, investors, and developers. This network effect gives it a big advantage over other digital currencies and helps to keep its dominant position.”.