It’s dipping season, folks. Well, it was dipping season. Yesterday, assets all across the cryptocurrency market were getting hammered, and the ubiquitous price dent had 89 out of Coin Market Cap’s top 100 turning red at the time of our first draft’s initial coverage.
During this latest dip, Bitcoin went sub $13k. As of press time, crypto’s flagship currency has bounced back up to around $14,200 as it’s climbing away from the lows it hit upon the recent Christmas correction. The market has been strapped for confidence since the pre-Christmas flash crash, as Bitcoin’s net worth has fluctuated around the $215-240bln range since the correction. Depending on these day-to-day ebbs and flows, this puts it down anywhere from 28-36% from its market cap’s all time high of $333bln.
A Loss in Bitcoin Dominance Could Pave the Way for Alt-coin Confidence
In the wake of the recent correction, however, we’ve witnessed a rare sight: Bitcoin’s market capitalization dominance has fallen below 40%. The last time this happened, alt-coins were on the come-up of a booming summer market, and Ethereum was breathing down Bitcoin’s neck amidst wild speculations of the flippening. During this time, Bitcoin’s market dominance reached a low of 37.29%.
Now, Bitcoin is inching towards this figure once again, entertaining the possibility of an unprecedented low in market dominance. Over the course of the last two days, crypto’s king has flirted between a 37.5% and 39% share of crypto’s total marketcap. If it drops below the 37.29% threshold, we’ll see Bitcoin at its weakest since the market’s inception.
Of course, this came at a time when the rest of the market was suffering, as well, with the exception of a few outliers. Ripple was one of these exceptions, surging to a new all time high yesterday of $2.84. This situation calls to mind Ethereum’s gaining on Bitcoin back in June, as Ripple’s current capitalization is $90bln, nearly half of Bitcoin’s own. Difference being, of course, Ripple is one of the only currencies actually performing well right now, while Ethereum’s surge came with a rising tide of alt-coin prices.
Still, Bitcoin’s neutered market dominance is good for one thing: it mitigating the impact of the latest correction. But everything still bled out for a while there, right? Well, yes, but when we compare this correction to those in months past, a more evenly distributed share of market wealth is stanching loses.
For example, let’s compare our latest dip to one from last September. Over the course of about two weeks, Bitcoin’s price fell 40% from an all time high of $5,000. The market followed suit, dropping 44% to $100bln from a high of $180bln just 13 days prior. At the time, Bitcoin boasted a market dominance of ~45%, and as the data indicates, crypto’s overall market cap seemed fettered to Bitcoin’s fluctuations. Just take a look at charts for both Bitcoin’s price and the total market’s value during the September correction–they’re practically identical.
On a smaller scale, an end of November correction tells a similar story. As Bitcoin lost 19% of its value, the market’s overall capitalization dropped a nearly identical 20%. During this dip, Bitcoin owned a healthy majority of the market at 55%.
But it looks as though times have changed. Since peeking its head just above $20k on December 17th, Bitcoin has lost 30% of its value with its current price floating around $14,000. Meanwhile, cryptocurrency’s net worth is only down 6% since Bitcoin began its most recent downward trend. The market hit an all time high of $654bln on December 21st, and at press time, it is valued at approximately $610bln. Even as alts suffered losses yesterday, the market was only down 13% from its December 21st high. All the while, Bitcoin’s market dominance has made a steady recession from 55% to its current 38.6% share.
I’m not going to tell you that Bitcoin is dying, nor am I going to try to argue that the market hasn’t taken a hit thanks to the Christmas correction–most coins suffered loses from their all time highs, and its likely that your portfolio has come down with a case of post-holiday scarlet fever.
But I will say that, when we compare this pullback to corrections in the past, alt-coins and the market in general are fairing much better than they would be if Bitcoin held a majority of overall market value. Whereas the market’s losses have been nearly synonymous with Bitcoin’s own over the course of 2017, it appears that cryptocurrency as a whole is slowly but surely breaking free of the ties that bind its fate to Bitcoin’s.
If 2018 brings balance to market dominance within cryptocurrency’s top 10, this could usher in a new era of alt-coin confidence, and it could also hedge investing risks by distributing wealth more proportionally across all market assets.
So keep an eye on Bitcoin’s market dominance heading into the new year, and don’t despair too much over your sickly portfolio–it could be much worse.
Disclaimer: The views expressed in the article are solely that of the author and do not represent those of, nor should they be attributed to BAN.
Featured image from Shutterstock.
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