Bitcoin’s ($BTC) dominance in the cryptocurrency market hit 58% on 16 September, the highest it’s been since April 2021, according to TradingView. Market dominance refers to a coin’s share of the total cryptocurrency market.
This marked a significant moment for Bitcoin, which has been steadily gaining market share over the past two years. As Bitcoin rises, many altcoins, including Ethereum ($ETH), are losing ground as well.
Bitcoin’s growth in dominance has been consistent since the collapse of the FTX exchange in November 2022. This had sent its price down to $16,000 during a major market crash. Since then, Bitcoin has been on an upward trend.
One major factor behind this rise is the decline of altcoins. Ethereum, the second-largest cryptocurrency, has seen its market share fall sharply.
In the past year, Ethereum’s dominance has dropped by 30%, falling below 14% for the first time in over three years. This loss of market share for Ethereum has helped push Bitcoin’s dominance higher.
When $BTC’s dominance hit a key level recently, analyst ‘Rekt Capital’ pointed out, saying. “The last time such a weekly close occurred, it kickstarted a multi-month Bitcoin dominance uptrend to 71%”.
However, some are not convinced that Bitcoin’s dominance will continue to grow. Another crypto analyst, ‘Cryptollica’, suggested that Bitcoin’s dominance might drop to 35% by mid-2025, possibly leading to an “altcoin season” where other cryptocurrencies could perform better than Bitcoin.
How are altcoins being affected?
Bitcoin’s growing dominance has put pressure on altcoins, particularly Ethereum. Since Ethereum’s big upgrade, known as the Merge, it has struggled to keep up with Bitcoin’s price gains.
Even the launch of Ethereum spot exchange-traded funds (ETFs) has not boosted its market performance, as investor demand remains low.
One sign of the struggles altcoins are facing can be seen in the perpetual futures market. These are financial contracts that allow traders to take large positions in cryptocurrencies with little upfront money.
Solana ($SOL), for example, saw a significant drop in interest from traders on Binance, with open positions falling from $1.2 billion in March to less than $680 million by September. This drop indicated that traders are pulling out of altcoins and putting their money back into Bitcoin.
Bitcoin’s reputation as a safe asset became even more evident during a big market selloff in early August. While most altcoins saw heavy selling, Bitcoin remained relatively stable, with strong buying activity in the US market.
What’s next for Bitcoin and the market?
The growing demand for Bitcoin can also be seen in traditional finance. While Ethereum ETFs have struggled to attract investors, Bitcoin ETFs have proven to be more durable.
Despite some short-term outflows, Bitcoin ETFs saw net inflows of $400 million after a brief period of withdrawals in late August. This shows that institutional investors continue to have more confidence in Bitcoin than in other cryptocurrencies.
As noted before, not all analysts believe Bitcoin’s dominance will keep rising. The founder of Dira Capital, Steven Cook, thinks Bitcoin may soon reach its peak dominance, but,
“We may have a few more months of BTC Dom increasing to 60%+, but the time to have been making calls about BTC Dom was ~2 years ago”, Cook said.
Another factor to consider is the rise of stablecoins, like Tether ($USDT), which are used as a medium of exchange during periods of market uncertainty.
The turnover ratio of stablecoins, which measures how often they are traded, has increased this year, reflecting their growing use.
Exchanges like BitGet, which have seen more altcoin trading, still rely heavily on retail traders for volume.
Overall, Bitcoin’s dominance may continue for a while, but altcoins could struggle unless regulations improve and global market sentiment becomes more favourable.
For now, Bitcoin remains the top choice for both retail and institutional investors in the volatile world of cryptocurrencies.
