Why is bitcoin dominance climbing in this bull market?

[magneto]

I think that a lot of people had expected BTC dominance to go down as we saw the bull market unfold, because in the 2017 bull market we saw a huge dip in this index from 80+% pre-bull market to the sub-40%'s.

So, why is this trending in the opposite direction now? It pretty much went from 35% to 62% within a year and a half. Historical data and intuition would tell us that as euphoria enters the market, more people will toss their money away towards "penny-tokens".

Could it be attributed to institutional investors, the better fundamentals underlying BTC and the network, or a more mature market? Or is it something else?

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[pooya87]

because it is NOT dominance. it is only market cap.

what is market cap? it is multiplication of supply and price.
before 2017 the shitty website that started this "dominance" nonsense only contained about 600-700 altcoins and the sum of all circulating supply was around 1,800,000 million. so "dominance" at this point is calculated with 15 million bitcoin supply divided by 1,800,000 million altcoin supply and it is 90%.

then the 2017 craze began and the ICO shitshow intensified to the point where each day we saw a new shitcoin pop up with billions of supply. by the end of 2017 we had somewhere around 3000 altcoins (400% increase) and the total circulating supply grew to 30,000,000 million (1566% increase).
so "dominance" at this point is calculated using 16 million bitcoin supply divided by 30,000,000 million altcoin supply and it is 30-40%

then in 2018 those shitcoins that were created started dying and every altcoin pump started getting dumped. with each losing at least 90% of their value. today we are only seeing 2250 altcoins from that near 3000 (25% Decrease) and the total circulating supply has shrank down to 12,000,000 million (60% Decrease) as a lot of them died or were delisted.
so "dominance" today is calculated using 17 million bitcoin supply divided by 12,000,000 million altcoin supply and it is 60%

that is why it is not "dominance" it is just a ratio of supplies. not to mention that what coinmarketcap.com is calling "circulating supply" is not really "circulating" it is total supply. if we remove the premines and coins that are not in circulation most altcoins lose about 70% of their market cap specially big coins like ethereum and ripple.

[STT]

The split in 2017 from BCH caused the big shift in dominance and also some deliberately tried to elevate the fees I think.   It was the perfect storm to alter this % balance away from what it might have been.    Add in ETH and its tokens and that was a big weight away from BTC, surprised it was not even more.
Time is not repeating so simply in this case, its different afaik

[exstasie]

I think that a lot of people had expected BTC dominance to go down as we saw the bull market unfold, because in the 2017 bull market we saw a huge dip in this index from 80+% pre-bull market to the sub-40%'s.

So, why is this trending in the opposite direction now?

Altcoins need sideways action in BTC to rally. When BTC is "boring" and "stable" especially in a mid/longterm bullish context, money flows into alts as investors seek out more risky investments.

On the flip side, when BTC momentum is very strong in either direction, altcoins suffer. When BTC rallies hard, altcoin holders dump to chase BTC. When BTC dumps hard, altcoin holders panic back to fiat (partly or fully via the alt/BTC markets).

When BTC finally slows down and enters a mid term range, things will start to feel "boring" again. Then you know what time it is.

[beerlover]

Well, it is obvious because alts haven't got their altcoin bull run just yet. That is what happens when altcoins suddenly start to go up, remember there are still coins down 70%+ from where they have been. So, in retrospect if you want the dominance to go down then you have to wait for the altcoin run, if bitcoin suddenly stops and finds its peak which it can't break and go any higher even if the price goes down or stays same the altcoins will see new attention.

Remember 2017 peak everyone started to attack each and every single coin trying to double their money, people started to see altcoins like free money where they can double it and all that, that is why if you wait around enough the dominance will fall for sure, bitcoin doesn't even have to go down because altcoins will have their own bull run.

[magneto]

I think that a lot of people had expected BTC dominance to go down as we saw the bull market unfold, because in the 2017 bull market we saw a huge dip in this index from 80+% pre-bull market to the sub-40%'s.

So, why is this trending in the opposite direction now?

Altcoins need sideways action in BTC to rally. When BTC is "boring" and "stable" especially in a mid/longterm bullish context, money flows into alts as investors seek out more risky investments.

On the flip side, when BTC momentum is very strong in either direction, altcoins suffer. When BTC rallies hard, altcoin holders dump to chase BTC. When BTC dumps hard, altcoin holders panic back to fiat (partly or fully via the alt/BTC markets).

When BTC finally slows down and enters a mid term range, things will start to feel "boring" again. Then you know what time it is.

Interesting take.

I can understand where you're coming from, about the correlation between the movements of BTC and other cryptos. But is this relationship solely dependent on BTC price, or are there more fundamental factors apart from that?

But why did we see the opposite happen in the 2017 bull market? Bitcoin did not move sideways (in fact, went from $400 to $20k in pretty much a year), yet its dominance shrunk significantly. I would attribute that to more than just BTC's movements.

Also, when do you think that time will be, when BTC starts to move sideways?

[exstasie]

Altcoins need sideways action in BTC to rally. When BTC is "boring" and "stable" especially in a mid/longterm bullish context, money flows into alts as investors seek out more risky investments.

On the flip side, when BTC momentum is very strong in either direction, altcoins suffer. When BTC rallies hard, altcoin holders dump to chase BTC. When BTC dumps hard, altcoin holders panic back to fiat (partly or fully via the alt/BTC markets).

When BTC finally slows down and enters a mid term range, things will start to feel "boring" again. Then you know what time it is.

Interesting take.

I can understand where you're coming from, about the correlation between the movements of BTC and other cryptos. But is this relationship solely dependent on BTC price, or are there more fundamental factors apart from that?

It's not solely dependent on BTC, no. There is definitely a correlation between altcoin prices : Bitcoin price, and altcoin prices : Bitcoin volatility but it's not 100% of course. There are always a few coins that manage to buck Bitcoin's trend and rise when it crashes. But in general, this is what I have observed over 6+ years trading this market.

But why did we see the opposite happen in the 2017 bull market? Bitcoin did not move sideways (in fact, went from $400 to $20k in pretty much a year), yet its dominance shrunk significantly. I would attribute that to more than just BTC's movements.

Also, when do you think that time will be, when BTC starts to move sideways?

Look at 2017 in two parts, with emphasis on altcoin/BTC charts. The first half of the year was "altcoin season." The second half of the year (after the market broke above $3K) was all about Bitcoin.

Bitcoin was trending upwards the first half of the year, but it was a very slow grind compared the parabolic move seen in August onward. That's why I emphasize the importance of a mid term bullish context. Slow mooning or sideways-ish/uptrending tends to really benefit altcoins. The recent rise in Bitcoin is rising way too fast for altcoin/BTC charts to hold.

[Slow death]

@pooya87 has already explained everything, and I think his explanation makes a lot of sense, now speaking on the less technical side ... what do these altcoins have to offer in the real world? every day has some new shitcoin that no sense of existing has. People are realizing that altcoins (most of them) have no use in the real world, and even the internet has very limited use. There is not a very large adoption to the altcoin, and the sad thing about it all is to read in the threads very optimistic comments of some people. Unbelievable, in the thread of the ETH for exemple, I'm shocked with so much optimism exaggerated. Current price of the ETH is 0.026 BTC and even then still very optimistic, when the price was of 0.034 BTC were very optimistic and if anyone post some criticism will be easily insulted.

[thecodebear]

This bull market I expected Bitcoin dominance to rise.


Why?

Because during this bull market Bitcoin will be added to the portfolio's of many more classical investors including institutional investors who manage trillions in assets. Traditional financial companies are and will be building out bitcoin services to their clients during this bull market. Those things essentially didn't exist until this year. And notice I said they are building out BITCOIN services, not crypto exchanges that service a wide variety of altcoins. Big financial money is not looking at getting into random altcoins that could drop off the face of the earth or have no clear compelling use case. They are interested in THE cryptocurrency - bitcoin.

Bitcoin is the only safe crypto, it is the only store of value crypto, it IS the crypto market. Institutional investors are gonna put 90%+ of the money the put into crypto, into Bitcoin. Also the ICO boom is gone, another ICO boom is not going to happen after much of the market looks at ICOs as some combination of fraud, scams, or huge gambles since they pretty much amounted to nothing (not to mention their legal status is now very much in question). Basically we're probably gonna see the top coins separate even more from the random assortment of smaller coins, with Bitcoin sucking up most of the new money. I wouldn't be surprised if Bitcoin spends a good amount 2020 at 70%-something dominance.

[pooya87]

Also the ICO boom is gone, another ICO boom is not going to happen

the ICO thing itself is nearly gone but the thing it represented is not. ICO boom was not a new thing, it was new form of something that repeats every couple of years. and that is creation of a large number of new projects that people bet on for hopes of big profit. ICO which was basically smart contract creation made things easier for copycats to create a new project with least amount of effort unlike before where they had to run a whole stand alone blockchain network to run a new shitcoin!

i can see the same trend repeated again, probably in 2020 or at least end of 2019. the copycats have not gone anywhere and market is still filled with gamblers who only follow the hype. we are in for another rearrangement of so called "top" altcoins pretty soon.

[thecodebear]

Also the ICO boom is gone, another ICO boom is not going to happen

the ICO thing itself is nearly gone but the thing it represented is not. ICO boom was not a new thing, it was new form of something that repeats every couple of years. and that is creation of a large number of new projects that people bet on for hopes of big profit. ICO which was basically smart contract creation made things easier for copycats to create a new project with least amount of effort unlike before where they had to run a whole stand alone blockchain network to run a new shitcoin!

i can see the same trend repeated again, probably in 2020 or at least end of 2019. the copycats have not gone anywhere and market is still filled with gamblers who only follow the hype. we are in for another rearrangement of so called "top" altcoins pretty soon.

Sure there will always be part of the market willing to gamble on whatever random coins pop up during a bull market. But two things drastically hurt the chances of another ICO boom:

1. Most people view the ICO craze as pure gambles that amounted to nothing and if you got lucky you got out with big profit but if you held onto these random projects you lost most of your money. Now that basically all of them amounted to nothing people aren't as likely to get caught up in another craze of similarly worthless products.

2. Regulatory bodies of various nations have either banned ICOs or said that existing securities rules apply to them, which means basically every single ICO  from 2017 would be illegal today.

So if there is another round of ICOs it is gonna be much smaller as companies will have to actually abide by regulatory agency's laws on securities, and also a lot fewer people are gonna put their money into nothing more than a white paper.

Basically, ICO boom ain't coming back.

[Indrawan77]

I think this has to do the implementation usage in real life, most of the people only think alt coin as the asset to make profit but for bitcoin it can be as asset and currency and within the more positive news where big companies thinking to adopt crypto, most people now are back in investing bitcoin, so that's why the dominance of bitcoin is rising

[Naida_BR]

I think that a lot of people had expected BTC dominance to go down as we saw the bull market unfold, because in the 2017 bull market we saw a huge dip in this index from 80+% pre-bull market to the sub-40%'s.

So, why is this trending in the opposite direction now? It pretty much went from 35% to 62% within a year and a half. Historical data and intuition would tell us that as euphoria enters the market, more people will toss their money away towards "penny-tokens".

Could it be attributed to institutional investors, the better fundamentals underlying BTC and the network, or a more mature market? Or is it something else?

I was one who expected for altcoins to have a bigger increase than Bitcoin these days. However, It seems that Bitcoin dominance keeps increasing and altcoins not.
I blame this situation to the release of Libra. Maybe these people who buy now are new investors that joined the market after the Libra announcement. Given that, they are not aware that altcoins are at lows, as they are mostly aware of Bitcoin as a cryptocurrency.

[1Referee]

When BTC finally slows down and enters a mid term range, things will start to feel "boring" again. Then you know what time it is.

It might be a bit different this time. I don't think we'll ever see the altcoin space as a whole boom the way it did back in 2017.

It will be more like a lottery pool where you have to buy plenty of tickets and hope that one of them will be the winning one. With so much institutional interest in Bitcoin, more institutional on-ramps, it's difficult to imagine that altcoins will be shining as a whole. What happened in 2017 was extreme where the emergence of Ethereum played one of the biggest role.

Another thing is that with more demand and platforms offering high leverage trading there is no such a thing as boring anymore. Even without wild fluctuations you can make trading in Bitcoin as wild as you want it to be by applying leverage.

[AjithBtc]

The bitcoin dominance keeps increasing, and this is all because of the funds getting invested into bitcoin trading all the tokens that were kept hold with the expectation of growing high with bitcoin. Altcoins growth hasn't took place in a large scale compared to bitcoin, an year similar to 2017 is the only possibility for the recovery of portfolio value of people with majority of altcoin holdings.

Possibly throughout the year the dominance level between bitcoin and altcoins will continue to be the same, and can expect the dominance level of altcoins to move from stagnation with the growth initiation of ethereum.

[hatshepsut93]

Because people see that altcoins suck, nearly every coin used to shit on Bitcoin for having 10 minute blocks and high fees, promising to take its place as number one coin, but people still don't use them. Then there are many coins who promise some novelties, like smart-contracts, AI, decentralized computing, VR and other buzzowrds - and guess what, people still don't use them. And let's not forget how famous altcoins are for their scams, If investors learned something from 2017, it's that alts don't have good fundamentals to back their value in long term.

[BrewMaster]

When BTC finally slows down and enters a mid term range, things will start to feel "boring" again. Then you know what time it is.

It might be a bit different this time. I don't think we'll ever see the altcoin space as a whole boom the way it did back in 2017.

i don't see why not. there are still lots of new investors coming in bitcoin every day who will then be exposed to bombardment of advertisement of different altcoins promising them "better" coins and "better" profit. with the pumps, a lot of  them will be attracted over there.
we have also see some signs of the same pumps this year as pumpers started pumping a lot of different altcoins each 200% to 500% before bitcoin started rising fast.

[dothebeats]

No matter how you twist and turn it, bitcoin dominance is just bitcoin's market capitalization compared to all of alt's market cap, so it's basically a useless metric if you'd ask me. Also in 2017, that is the year wherein scam ICOs flourished, so it's natural that they have their values artificially inflated to prices unimaginable due to the fact that a lot of people has been lured into their schemes and are practically buying the shit out of those coins without even thinking about it. This time it's different: ICOs are pretty much a thing of the past and bitcoin is where all eyes are locked on. They know that there are no other ways to make money in the crypto sphere in the mean time save for a few alts here and there and of course, bitcoin. They don't want to risk it big, and seeing that bitcoin was the first one to get the move and maintain it for months, they go in to where the profit is sure.

[exstasie]

When BTC finally slows down and enters a mid term range, things will start to feel "boring" again. Then you know what time it is.

It might be a bit different this time. I don't think we'll ever see the altcoin space as a whole boom the way it did back in 2017.

That's what everybody keeps saying. And yet 2017 was just a revamp of the 2013-2014 altcoin bubble. I am wary of believing "this time will be different." The fundamental reasons for altcoins and security-backed tokens to bubble has not changed a bit. With every bubble cycle, Bitcoiners expect altcoins to die. Every time, they are wrong.

Another thing is that with more demand and platforms offering high leverage trading there is no such a thing as boring anymore. Even without wild fluctuations you can make trading in Bitcoin as wild as you want it to be by applying leverage.

Okcoin and BitVC/Huobi were offering high leverage futures markets back in 2014. Traders from those days will tell you, Okcoin futures were an integral part of price discovery into 2016 and were highly utilized by Western traders. Nothing has changed in this department.

[omonuyak]

Because people see that altcoins suck, nearly every coin used to shit on Bitcoin for having 10 minute blocks and high fees, promising to take its place as number one coin, but people still don't use them. Then there are many coins who promise some novelties, like smart-contracts, AI, decentralized computing, VR and other buzzowrds - and guess what, people still don't use them. And let's not forget how famous altcoins are for their scams, If investors learned something from 2017, it's that alts don't have good fundamentals to back their value in long term.

We can not compare trust and confidence people and investors has on Bitcoin with other coins and from inception, bitcoin has been dominate the cryptocurrency market. I told my friend today "that the way things are going we may end up having most of the altcoins and tokens wipe out as holders may likely swipe all the altcoins holding to Bitcoin for profits".