Earlier this Friday (08/14), bitcoin reached its lowest market dominance in over 1 year, with just 58% of the market capitalization according to data from coinmarketcap.com. What happened to btc to lose 7% of the market in less than 1 month?
As we can see in the graph below, Bitcoin has been losing ground to other cryptocurrencies. The main one is Ethereum, the second largest in market capitalization.
Since the Ethereum 2.0 test announcements, the network token has been consistently valued. Investors are looking to buy at least 32 ethers to participate in the proof-of-stake consensus and reward system, which will be implemented in phase 0 of Ethereum 2.0.
Along with the race for Ethereum 2.0, the smart contract platform has seen significant growth in the use and creation of new decentralized applications. Total fixed assets in the Defi (decentralized finance) market on Ethereum increased almost 150% in 2 months.
In addition, other cryptocurrencies have gained relevance. Cardano, Chainlink, and Crypto.com all saw big increases in 2020. Chainlink, for example, went from $ 1.80 in early 2020 to $ 18.03, an increase of 900%.
Despite the drop, Bitcoin has been in more difficult positions over the years. In 2018, the cryptocurrency reached its minimum dominance with only 32.81% of the total market capitalization.
What does this mean?
Although the marketcap is not the best metric to measure the success of a cryptocurrency, it receives a lot of attention from investors. In general, currencies with a low market value have little liquidity and are more prone to strong price movements.
This drop in bitcoin dominance, while minimal, shows that there is still room for various altcoins to thrive and participate in the still nascent crypto market. In order not to miss these opportunities, stay tuned to Crypto report on Telegram.