Will Bitcoin Ever Regain Its Lost Dominance?
Investors love expanding their portfolios with favorable cryptos. However, after the recent market crash, BTC, ETH, Cronos crypto, and other digital currencies have lost up to half of their value. However, does that mean that it is finally over for big names such as Bitcoin? Will It completely lose its value?
In 2021, Bitcoin and Ethereum made up more than half of the crypto market. In fact, Bitcoin’s share was more than 50% of the total market in 2021. No one can deny the reputation and importance of Bitcoin. So, let’s find out if it will eventually regain its dominance.
What is Bitcoin Dominance?
Bitcoin dominance defines the ratio of the coin’s market capitalization to the total crypto market cap. In simple words, this shows Bitcoin’s value compared to other cryptos, allowing investors to make informed investment decisions.
Bitcoin dominance = Bitcoin’s market cap / Other cryptos’ market cap
Sometimes, traders use the Real Bitcoin Dominance Index variant. This only considers coins that rely on the PoS (Proof-of-Work) mechanism. Through this index, you can track coin movements that have the potential to be used as a DEX in the upcoming years.
Here’s how you can calculate the Real Bitcoin Dominance Index:
Real Bitcoin Dominance Index = Bitcoin’s Market Cap / (Bitcoin’s Market Cap + PoW Cryptos Market Cap)
At this time, the real BTC dominance is almost 66.6%.
The only difference between BTC dominance and real BTC dominance is that the real BTC dominance doesn’t include ICOs and stablecoins, as they are associated with centralized intermediaries.
How Is BTC Dominance Related to the Crypto Market?
Market capitalization defines the total value of the crypto:
Market Cap = Total number of mined coins x Price of a single coin
This market capitalization is the primary factor playing in the role of BTC dominance. The market cap also establishes the potential stability of a coin and its popularity among traders and investors.
Typically, large-cap cryptos have a share of more than $10 billion, making them a secure investment. In contrast, the mid-cap cryptos are more volatile, with chances of higher growth potential.
Small-cap cryptos are highly volatile and with the potential to produce short-term growth. However, they are a high-risk investment for traders. Considering its history, Bitcoin defines the overall direction of the crypto market as it is the first leading crypto.
BTC is a “gateway crypto,” and generally the first coin investors invest in before they buy any other coin. This is due to the following reasons:
- Bitcoin has the upper hand and is offered by every crypto exchange.
- It is highly popular, making it the most visible.
- Due to the halving system, its supply is deflationary.
- Investors consider high-cap cryptos a safe investment.
When crypto demand rises and investors purchase crypto, BTC rises in value and affects the whole market. So, BTC always has a positive relationship with the overall crypto market.
Will Bitcoin Regain its Dominance?
The rest of the crypto market follows Bitcoin trends. This means the market will be down if Bitcoin is down and vice versa. Last November, in 2021, Bitcoin set an all-time high price of $68,000 before the eventual crash in 2022.
The rising interest rates, surging inflation, recession fears, and a volatile stock market have resulted in the downfall of the BTC and the larger crypto market. The coin has dipped as low as $17,000 in the previous months.
However, experts are still optimistic that even after this rocky hit, BTC will regain its dominance and hit the $100,000 mark. In fact, it is only a matter of when not if, but when will Bitcoin rise and dominate the crypto market again.
