- Bitcoin’s market cap dominance holds 45% for the first time since October 2021.
- The highest cryptocurrency market dominance has risen since the crash of Terra last week.
- Bitcoin has historically dominated the market during bearish cycles.
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Bitcoin has historically dominated the cryptocurrency market during recessions.
Bitcoin dominance rallies
Although the crypto market looks weak, Bitcoin is proving that it is still the “king.”
The number one cryptocurrency has seen its market dominance rise this week, rising to 45.27% Thursday. Bitcoin’s market dominance last exceeded 45% in October 2021, weeks before it reached an all-time high above $69,000.
Market value dominance refers to the proportion of the market that an asset represents. Bitcoin has historically been dominant during bearish cycles, but it tends to give way to other assets like Ethereum in bullish market conditions. Bitcoin’s dominance crossed 70% shortly after it first broke $20,000 in December 2020, but then faced a hemorrhage through most of 2021 as other assets rallied. Bitcoin’s dominance has been increasing throughout this year and has been on the rise over the past week.
The cryptocurrency market has had a shaky month so far, with the global market cap dropping from around $1.8 trillion to $1.3 trillion. Amid the volatility, Bitcoin has underperformed. The number one cryptocurrency posted its seventh consecutive weekly close in the red this week, an unprecedented drop even by crypto standards. According to TradingView data, it is currently trading at around $29,800, which is below the critical psychological level above $30K.
Although Bitcoin has had a tough time in recent months, according to a bear market pattern, many other low-cap assets have fared much worse, which explains why its dominance has risen. Many of the so-called “alternative first tier” networks that flourished in late 2021 suffered heavy losses amid the recession. Solana, for example, is 80.1% below its all-time high, and is trading at around $52.23. Avalanche, a relative newcomer in the smart contract space, saw huge gains late last year, but it has also fallen in recent weeks. It is 79.3% below its peak and is trading at around $30.16. Terra, one of the strongest performers of 2021, has also been eliminated after a devastating death spiral last week.
Interestingly enough, Bitcoin’s dominance increased when Terra began to collapse. The market was shaken by volatility throughout the week, which briefly caused the USDT to lose its currency peg and panic selling across the board. While bitcoin has rocked during the events, it has held up relatively well against other assets.
The market capitalization of Bitcoin is currently around $567.9 billion. Now in its seventh month of bearish price action, it is roughly 57% shy of its all-time high.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.