Bitcoin has been the most dominant cryptocurrency on the market for the past 13 years. It was the first cryptocurrency and has set the tone in the market for years. More and more projects were launched, but could not pose a threat to Bitcoin. But in the last few weeks and months, Bitcoin’s lead at Coinmarketcap has continued to decrease. Why is bitcoin dominance falling? In this article, we discuss the loss of Bitcoin’s lead over other cryptocurrencies and look for the causes.
What is Bitcoin?
Bitcoin is the first and most well-known cryptocurrency. It is based on the blockchain. It is a decentralized booking system in which transactions can be carried out peer-to-peer without a third intermediate distance. No central authority such as a bank or a state has control over the decentralized currency.
Bitcoin exists exclusively digitally and is represented by a digital character string. There is a limited amount of Bitcoins (21 million), which makes the currency inflation-proof. Bitcoin was created in 2009 and experienced a massive increase in value in the following years. Initially, bitcoin was worth less than the US dollar. Most recently, the value of Bitcoin rose to a five-digit value.
How much is Bitcoin worth?
The value of Bitcoin has grown massively over the past 13 years since its inception. Initially, the cryptocurrency was only worth a few dollar cents. But in February 2011, the value of bitcoin exceeded the value of the US dollar for the first time. In the years that followed, bitcoin became more and more valuable.
In November 2021, Bitcoin reached a price of over $68,000, which was the all-time high to date. After that, the Bitcoin price fell again due to the bear market in recent months. Right now, bitcoin is in the $24,000 to $25,000 range.
What is Coinmarketcap and what does it say about Bitcoin?
The Coinmarketcap website provides a price table for most of the cryptocurrencies on the market. The cryptocurrencies are sorted by market capitalization. The market capitalization of a cryptocurrency represents the total value of all coins of a cryptocurrency in circulation.
At Coinmarketcap, Bitcoin has been in the first place since its inception. For a long time, the market capitalization of bitcoin was many times higher than all other cryptocurrency values combined. This is referred to as Bitcoin dominance. However, this Bitcoin dominance has decreased more and more in recent years.
How high is Bitcoin’s dominance?
For most years, Bitcoin dominance at Coinmarketcap has been well over 50%. But in recent years, this dominance of the Bitcoin market capitalization has continued to decline. Bitcoin continued to increase in value, but more and more cryptocurrencies came onto the market and projects like Ethereum grew extremely fast.
Overall, the dominance of bitcoin is steadily declining. However, over these periods of time, the share of bitcoins often varies greatly. In August, Bitcoin dominance at Coinmarketcap fell back to a low of 41%. Above all, the strong price gain in Ethereum caused the falling share of Bitcoin.
Why is Bitcoin losing its dominance on Coinmarketcap?
Bitcoin has dominated all cryptocurrencies for years. But in recent years this has been decreasing. This is mainly because the Alt-Coins like Ethereum are increasing in value massively. The Ethereum network in particular is growing massively due to its extreme gains in value.
Other projects such as Cardano, Solana, Avalanche or the meme coins (Dogecoin, Shiba Inu Coin) see massive profits in bull markets. Especially in a bull market, the percentage gains of these coins are much higher compared to the gains of Bitcoin. Over the months and years, Bitcoin increasingly lost its dominance.
Will Bitcoin lose its place as the biggest crypto?
Bitcoin has been number 1 in market capitalization of all cryptocurrencies.. However, for a number of years, analysts have been assuming that in the future the day could come when Bitcoin could lose its first place in market capitalization. But can this actually happen in the next few years?
Bitcoin’s lead over the other altcoins, most notably Ethereum, has actually narrowed in recent years. Nevertheless, the gap is still extremely large. A stagnation of the Bitcoin value is extremely unlikely. Its deflationary structure, which is guaranteed by capping the number of bitcoins at 21 million, ensures that the bitcoin price should continue to rise in the future.
Furthermore, the Bitcoin price continues to indicate the direction of the market and agrees whether the altcoins are rising. As a result, the Bitcoin price increases with the values of the Altcoins at Coinmarketcap. Bitcoin’s lead over other cryptocurrencies only decreases slightly over time.
Can Ethereum overtake Bitcoin?
Bitcoin continues to reign supreme at Coinmarketcap. But when it comes to a cryptocurrency that could soon catch up with Bitcoin in a few years, Ethereum is almost always mentioned.
Ethereum has been number 2 at Coinmarketcap for years and has long established itself at the top as the second most important cryptocurrency. The Ethereum ecosystem is growing rapidly. With its smart contract functions, Ethereum is the basis of numerous decentralized applications. The applicability of the Ethereum blockchain is the most frequently cited reason for a possible changing of the guard at the top.
But Ethereum still has a long way to go. Furthermore, the blockchain has numerous other competitors behind it who compete with Ethereum in decentralized applications. These include Cardano, Solana, and Avalanche. With the Ethereum 2.0 update, Ethereum wants to remedy its weaknesses compared to other blockchains.
Is Bitcoin a Good Investment?
Bitcoin is still relatively cheap in the bear market at the moment and has a rather low price at Coinmarketcap. The Bitcoin price should rise massively again for the next bull market. This bull market could be a few months away. But in the long term, an investment in Bitcoin should be particularly worthwhile at these low prices.
