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Altcoin vs Bitcoin: Battle for Dominance after the Halving

4 months ago

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Before we begin, let us hop onto the same page and understand what bitcoin dominance is.

What is Bitcoin Dominance?

Bitcoin Dominance is simply the market share of bitcoin in the cryptocurrency market determined by market capitalization(Circulating Supply x Price). Bitcoin is by far the largest cryptocurrency by market capitalization and a top contributor in trading volume.

Bitcoin Dominance ratio can be derived from dividing market cap of bitcoin over the sum of the cryptocurrency market cap as a whole. As the dominance represents a ratio of market share, bitcoin dominance is often affected by the performance of altcoins. Therefore, as shown in figure 1 below, the Bitcoin Dominance dropped dramatically at the time ICOs gained popularity where Ethereum almost overtook Bitcoin in market cap.

https://s3-us-west-2.amazonaws.com/secure.notion-static.com/f659cbcc-035e-43cc-ba67-a85d351ef4c9/percentage-of-total-mark_(1).png

Figure 1 - Source: coinmarketcap.com

BTC Halving - Affect on Dominance

As market capitalization is calculated by the circulating supply and price, it is logical to assume that the dominance will gradually fall over time as the rate bitcoin issuance has dropped by half.

However, as shown in figure 2, the Bitcoin Dominance is still maintaining its stance at approximately 67~68%. It is in great interest by many cryptocurrency enthusiasts to see where the dominance will be heading. As the supply rate has dropped, the only way the dominance can be maintained is through the increase in bitcoin price.

https://s3-us-west-2.amazonaws.com/secure.notion-static.com/d9c53b27-b8a5-4840-b273-aad132991025/percentage-of-total-mark_(2).png

Figure 2 - Source: coinmarketcap.com

As of May 11, the date of the 3rd halving, the price of bitcoin has continuously demonstrated an upward trend which was a key factor in maintaining the dominance level.

https://s3-us-west-2.amazonaws.com/secure.notion-static.com/cdfdb32e-2cf3-4019-b864-71fc24651c5f/bitcoin-charts.png

Figure 3 - Source: coinmarketcap.com

Leading up to the halving, the Bitcoin tweet dominance (shown in Figure 4) also hit its highs since the 2017 bull-run.

https://s3-us-west-2.amazonaws.com/secure.notion-static.com/c7787bfe-1e99-4c43-b73d-91530ab463df/Untitled.png

Figure 4 - Source: The Tie

Altcoin Performance

As mentioned above, another factor to consider is the Altcoin performance or the so called "alt-season". Although Bitcoin strongly stands as the main crypto asset across the world, there are many altcoin fans that are waiting for the "alt-season" to come. Now with a major event for Bitcoin out of the way, what influence will this have in the altcoin market?

Furthermore, many institutions and governments are also leveraging altcoin protocols to issue their own cryptocurrencies to add efficiency and innovation to existing systems. These initiatives will bring greater reach to the general public, meaning more demand. Shown in figure 5, over the past month, the so called whales have been discovered stacking up with several key altcoins in their wallets.

https://s3-us-west-2.amazonaws.com/secure.notion-static.com/8ac0d972-a878-4751-8d29-fecdd5afeb6b/Untitled.png

Figure 5 - Source: Santiment

Below are some upcoming events for Altcoins and also institutional use cases

Altcoin Events

Institutional Use Cases

Now that the halving is over yet ongoing, uncertainty still remains on how the cryptocurrency space (including dominance) will be reshaped. Will we see another alt-season like the one back in 2017? or is everyone keeping their bitcoins in their pockets?

Either way, these uncertainties can be traded on derivatives exchanges like MyCoinStory.com where traders can go long or short depending on which way they think the prices will move.

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Published 4 months ago