Bitcoin Dominance rising again. What is happening?

[fillippone]

Market dominance is a shitty indicator, we all know why: it is based on market prices. After Bitwise report, where we learnt that many exchanges faked volumes, and ultimately prices themselves, we cannot ignore anymore those flaws.
Still dominance can point in the right directions to intresting thoughts about markets in a broader way.

Market dominance just broke the peak during Dec '17 (price) ATH, and at 65,2% it is now at the highest levels since April 2017.



Another way of looking at the same phenomenon is the following: relative price movements of shitcoins versus BTC over the last 3M



1BTC=1BTC
Elsewhere: red, red everywhere.
Some obscure random shitcoin in the green, but just a statistical error, I guess.
This is truly remarkable.

In the past we saw BTC having a beta<1 (if you think at a CAPM middle), during bulls run alt rose more than bitcoin (volatility weighted) while in bear market alts downperformed BTC (alt lose more in bear market than BTC).
This time is different and in this market BTC is growing more than alts.

I propose four reasons why market dominance is going north, I ask you your toughs.

I list there in the order of market relevance, in my opinion:
 

• Technology has progressed, people studied and has understood better how cryptos work, so they came to the right conclusion shitcoins are indeed...shitcoins. Shitcoins value proposition has since faced and now they are clearly revealed for what they have always been: (kind of elaborate) exit scams by fraudster to transfer your bitcoin in their wallets.
• We are on the verge of an epochal bull run caused by institutional money on the brink on entering cryptocurrencies. Of course the main gateways for this to happen is Bitcoin. I can't see them diversifying their investment into other bitcoins in the near future both because lack of regulations, lack of liquidity and above all security and scrutiny on this coins.
• Libra is coming to the market, this half fit, half cryptocurrency coin will be a huge success because it is going to be incredibly successfully where many other projects, bitcoin included, have dramatically failed: adoption. Bitcoin will survive this, of course, but shitcoin basing their value propositions on “micropayments” (read BCH and minor forks) are facing doomsday. 
• As suggested in the comments, Bitcoin is approaching halving. This has historically been a price-positive events. Also there are theoretical reasons why this should still be the case, as suggested by PlanB in his article Modeling Bitcoin's Value with Scarcity.   As the halvening effect is probably not fully priced yet, people are trying to front-run the effect. This positive effect is limited to bitcoin only, that’s why altcoins aren’t following.

• The more Bitcoin performs versus shitcoins, the more the random investors will be keen on buying bitcoins and abstain to shift to shitcoins, because Bitcoin IS the asset performing. SO kind of self-fulfilling mechanism/shelling point where you don't want to convert your bitcoin into other assets

What are your toughs?

EDIT: Just realised this thread is also the topic of my first ever merited post on BitcoinTalk. After almost one year and 700 merits later I think that post aged well!

[1714784499]

1714784499

[1714784499]

1714784499

[1714784499]

1714784499

[1714784499]

1714784499

[CryptopreneurBrainboss]

Although you have said it all, I suppose the reason bitcoin dominance is rising is due to the high expectations investors are putting on the halving event. History has always favoured the price increasing after this event so more investors are hoping to buy-in now to profit later. The altcoins markets doesn't have any positive or bullish news surrounding it therefore investors aren't attracted to the market unlike 2017 which had the ICO gold rush. IEOs on the other hand favours selective exchanges and projects so this can't contribute to the kind of success altcoins experience during 2017 bull run. The news spreading round the community is all about bitcoin, bitcoin this bitcoin that. From the halving event down to the institutional investors coming into the market which will definitely favor bitcoin is the major contributor to it's rising dominance, that's my thought.

[fillippone]

Very nice comment.
I edited the OP including it in the list.

[slaman29]

Actually, I think I've seen it even higher a few days ago, closer to 66% but definitely higher than the 65.2 you're stating now. Not that it really matters like you say since there is so much fake volumes all around the exchanges. But I'm wondering, if we remove all the fake volumes for alts, do you think it could even be bigger dominance for BTC?

[Lucius]

• Technology has progressed, people studied and has understood better how cryptos work, so they came to the right conclusion shitcoins are indeed...shitcoins. Shitcoins value proposition has since faced and now they are clearly revealed for what they have always been: (kind of elaborate) exit scams by fraudster to transfer your bitcoin in their wallets.

I agree with this reason, and I think this is maybe one of the most important reason why bitcoin dominance is so high, and altcoins do not follow king of crypto as was the case in the past. Many investors are burn too much money with altcoins, and they see that only bitcoin is crypto with purpose. There is a saying “Fool me once, shame on you, fool me twice, shame on me.”

• We are on the verge of an epochal bull run caused by institutional money on the brink on entering cryptocurrencies. Of course the main gateways for this to happen is Bitcoin. I can't see them diversifying their investment into other bitcoins in the near future both because lack of regulations, lack of liquidity and above all security and scrutiny on this coins.

True or not this is interesting point, some people say that latest bull run is mostly driven by institutional money, and since we know that this part of year is in most times very slow and boring, money need to come from from somewhere. We can not say who is exactly behind it, but they pump price up from $4k to almost $14k in 3 months.

• Libra is coming to the market, this half fit, half cryptocurrency coin will be a huge success because it is going to be incredibly successfully where many other projects, bitcoin included, have dramatically failed: adoption. Bitcoin will survive this, of course, but shitcoin basing their value propositions on “micropayments” (read BCH and minor forks) are facing doomsday.

Maybe Libra will succeed, maybe not - it is hard to say what will be with this project at this time when FB is not get green lights even in USA. We can assume that this coins will not be welcomed in Russia where VKontakte (Russian version of FB) is have around 500 million users, anf FB is not so popular. An we can bet that China will not open door for this coin also, with the great probability that India will not be the country that will allow their citizens to use Libra just like that. Bitcoin is still have big advantage over Libra, it can be used anywhere - there is no need of government approval.

[Febo]

Bitcoin Dominance rising again. What is happening?

Since the halving is approaching, Bitcoin gets hyped and crypto enthusiasts have high hope for Bitcoin price. I am saying crypto enthusiasts, since rare out of crypto are much interested in Bitcoin or crypto in general. That is why Bitcoin domination grows. If  price of Bitcoin grows and is not from outside of crypto it have from altcoins.

[gentlemand]

I agree with this reason, and I think this is maybe one of the most important reason why bitcoin dominance is so high, and altcoins do not follow king of crypto as was the case in the past. Many investors are burn too much money with altcoins, and they see that only bitcoin is crypto with purpose. There is a saying “Fool me once, shame on you, fool me twice, shame on me.”

I would truly like this to be the case but let us revisit it when there's a proper bull run on. All notions of usefulness or value fly out the window when there's a whiff of dollars. So far it all looks pretty standard to me.

Even if institutional money is leading with Bitcoin there's a whole world of saps out there who'll swallow the 'next Bitcoin' narrative no matter what's actually screaming in their face.

I'm sure a ton of alts are never coming back. That still leaves plenty that will when the moment is ripe.

[YuginKadoya]

In my opinion, The new All-time high that Bitcoin is targeting right now because of the bull run, I think it will truly create a mass of people rooting with bitcoin they will surely be mesmerized by Bitcoin's Dominance and other people that go out to bitcoin will come back again because they will feel the need on getting on board again,

Technology has progressed, people studied and has understood better how cryptos work, so they came to the right conclusion shitcoins are indeed...shitcoins. Shitcoins value proposition has since faced and now they are clearly revealed for what they have always been: (kind of elaborate) exit scams by fraudster to transfer your bitcoin in their wallets.

And base on this theory people that are getting back on board have already gained knowledge about Bitcoin And knowing its true purpose and already understand that Altcoin that is stable coins are only a nuisance to the market of crypto that is why fewer people are prioritizing it.

Libra is coming to the market, this half fit, half cryptocurrency coin will be a huge success because it is going to be incredibly successfully where many other projects, bitcoin included, have dramatically failed: adoption. Bitcoin will survive this, of course, but shitcoin basing their value propositions on “micropayments” (read BCH and minor forks) are facing doomsday.  

I don't really think that Libra will become that successful in my opinion, Maybe it can become popular and regulated because of the popularity of Facebook and we can truly say that social media is a real source of a publicity stunt to the masses and some ICO back then are using these to advertise their projects It can sure gain popularity but not entirely have some kind of price increased that much.

[1Referee]

Bitcoin up = altcoiners saying altcoin season will start when Bitcoin either stagnates or goes down.

Bitcoin stagnant = altcoiners saying altcoin season will start when investors have made up their mind.

Bitcoin down = altcoiners saying that it's natural for altcoins to go down when Bitcoin does.

I think things will change when average joes go back to their deluded state of mind where they think altcoins can lift them out of their boring joe life. I don't expect a global altcoin season, but a part of the altcoin space will surely bounce up at one point, which probably might bring us a new generation of coins/tokens taking over the garbage that currently seems to be losing public interest.

[hatshepsut93]

The truth is simple - altcoins were in a bubble, much bigger bubble than Bitcoin was, realistically there's no way more than a dozen of coins can co-exist - the point of money is to be universal, so just like the US dollar is welcomed everywhere in the world, Bitcoin is the king of crypto. Tons of altcoins were claiming that they will dethrone Bitcoin, but when investors started realizing that it was a lie, those coins started losing their value.

[o_e_l_e_o]

realistically there's no way more than a dozen of coins can co-exist

There's absolutely no need for the vast majority of altcoins, and hopefully people are starting to realize this. Just look at the top 10 coins on coinmarketcap - two failed bitcoin forks, an insolvent stable coin, a banker's coin, two centralized scams, etc. Pointless money grabs.

Still, bitcoin dominance is a near meaningless statistic. I can create 10 billion tokens out of thin air, sell a single token to my friend for $10, and hey, my token now has a market cap of $100 billion and has just knocked around 17% off of bitcoin's market dominance. A hyperbolic example, sure, but with new altcoins being created out of thin air every day, and Tether adding in a few hundred million USDT as and when they feel like it, dominance doesn't really mean anything.

[pooya87]

Market dominance is a shitty indicator, we all know why: it is based on market prices.

actually it is because market "dominance" is based on market capitalization which is then mainly affected by the coins supplies. i posted some numbers here https://bitcointalk.org/index.php?topic=5158938.msg51618134#msg51618134
basically we were dividing 16,000,000 by 30,000,000,000,000 and ended up with 40% bitcoin dominance.
today we are dividing 17,000,000 by 12,000,000,000,000 and end up with 60% bitcoin dominance!

of course that is just part of it. the other main reason is the fact that altcoins have been dumping and disappearing to 0 for the past 1.5 year starting from 2018.

After Bitwise report, where we learnt that many exchanges faked volumes, and ultimately prices themselves, we cannot ignore anymore those flaws.

you can fake volume (which won't affect market cap hence no effect on "dominance") but you can't fake prices without spending a ton of money.

Another way of looking at the same phenomenon is the following: relative price movements of shitcoins versus BTC over the last 3M

1BTC=1BTC
Elsewhere: red, red everywhere.

EXACTLY!
that is what i have been saying forever! people always look at the wrong values when they check altcoin prices. and the funny thing is that they are all trading them with bitcoin but they look at their prices in USD!!!

~
What are your toughs?

as an experiment to know why market cap is a bad indicator for "dominance" and to understand the comment i linked above you can go ahead and calculate the REAL market cap of top altcoins by removing their premines and only using their REAL supply that is actually in circulation not locked away somewhere. then you can see that each of them lose at least 70% of the market cap that they currently have specially big coins that have big premines among the top 10 altcoins.

[BitHodler]

I'm sure a ton of alts are never coming back. That still leaves plenty that will when the moment is ripe.

It all depends on how crazy the retail mania will turn out to be-- coins deemed to be expensive motivates people to pick altcoins lower on the list, where even the worst possible shitcoins will pump like there is no tomorrow.

The part where things become interesting is when the moment will be triggering them to enter again. Is it alts hitting all time highs? Is it media sources such as CNBC explaining how to buy x/y/z shitcoin?

The fact that altcoins haven't seen much love shows how rekt the previous generation retail gamblers are. Some tokens literally lost over 99% of their value. From dreaming about lambos to dreaming about wiping altcoins out of their memory.

[fillippone]

The fact that altcoins haven't seen much love shows how rekt the previous generation retail gamblers are. Some tokens literally lost over 99% of their value. From dreaming about lambos to dreaming about wiping altcoins out of their memory.

Money got separated by stupids.
This is a natural and unstoppable process.
Hopefully it is for the Good.

Lessions learned, alts are never to come back.
At least: not these alts.

[gentlemand]

Is it media sources such as CNBC explaining how to buy x/y/z shitcoin?

The thing I'm most curious about is how are they going to frame it this time around if they do start shilling.

'Hey, since 2017 Shitcoin has achieved nothing, is owned by fewer people than last time, has not really evolved in any way whatsoever and cost its previous owner a 99% loss... what are you waiting for?' may not wash.

Most coins were still fresh and spouting off about their potential in 2017. There'll no doubt be some bonkers pumps but I'd love to know how buyers and hypers justify it to themselves. Bitcoin has plenty to point to in terms of progress regardless of price. Not a great deal else does.

Whatever happens I don't think any alt pump will resemble the previous bubbles. In 2013 there were only 40-50 coins in total. In 2017 there was the ICO shit and nearly two thousand more. The next one could look very different indeed.

[o_e_l_e_o]

Most coins were still fresh and spouting off about their potential in 2017. There'll no doubt be some bonkers pumps but I'd love to know how buyers and hypers justify it to themselves.

Most likely there will be a bunch of new coins for this exact reason. This has already happened in the past. Look at Dan Larimer for example. Launched BitShares, made some profit, abandoned the project, and now it is bleeding out. Launched Steem, made some profit, abandoned the project, and now it is bleeding out. Then he launched EOS, and for reasons unknown, a bunch of idiots poured money in to it and made it the most successful ICO ever. Now, the value of EOS against BTC is constantly falling. No doubt Larimer will take his profit and leave before long. But when he launches his next project, I have no doubt a bunch of idiots will jump on that one too.

Having said that, coins don't need to evolve, develop, have a working product, or be in any way actually useful, and people will still throw their money at them. Look at TRON, EOS, BCH, BSV, and so on.

This space is far from rational. A few empty promises and a shiny website is all you need.

[sana54210]

I think right now people are not even caring about altcoins which makes the dominance go higher and higher. Right now the whole entertainment is over at bitcoin and it goes up and down and makes all kinds of moves, we see 13.8k one day then see 10k the other day, hell we have seen under 10k in the past 24 hours even though it didn't stay there for too long.

So, that is why I think altcoins will not get too much attention some more time, bitcoin is already making enough movements tom ake a difference in anyones portfolio and that is why it is totally understandable why the dominance high since its enough for people, if you trade between dollar-btc all day you have enough volatility and possibility to make money. When these movements stop in bitcoin then it will be the time for altcoins to start moving as well.

[Heisenberg_Hunter]

There were 2 major price hikes in the history of bitcoin. One was the 2013 year and another was the 2017 year. Ethereum plays a major role in today's alt market since most of the shit coins are created out of ethereum network. 2013 weren't much affected with the shit coin losses since Ethereum was created only in late 2013 - early 2014. So people who came to know of the cryptocurrency market followed bitcoin and updated themselves with the tech in the later time. But the real problem started with the development of Ethereum and the formation of EEA. This was probably the reason which triggered various companies to learn a little bit of solidity code and create their coins out of thin air.

The event reached its peak by end of 2017 and probably people who came to know of cryptocurrency jumped onto alts in the verge of catching an earlier train. This fueled various companies and scammers to start their own coin. Once some of these companies collapsed, the 2017 newbies started realizing the real potential of bitcoin. This paved way for major selling in these shitcoins and the transfer of all their money to bitcoin.

Alts have the potential unless the start-ups don't scam and run away with investors money and similarly Ethereum is a good platform for bringing business into the blockchain if they are utilized in a proper way. The speculation of alts being the next bitcoin should come to an end and if that happens we would see the real potential coins which can solve the real world problems through blockchain cherishing over the period of time. People should become more educated and must have the capability of distinguishing a product based alt with a payment processing coin like btc.

[BrewMaster]

Lessions learned, alts are never to come back.
At least: not these alts.

that is something that the newcomers who are now bag holding tons of different altcoins in their so called "portfolios" don't want to accept. some time ago someone posted a screenshot of coinmarketcap website that belonged to a couple of years ago. it was funny to see the "top" coins of that time and how they were hyped up so much and people were thinking they all are going to live side by side of bitcoin and there were even talk of "replacing" bitcoin! that list doesn't look anything like today's list but people still have the same expectations...

[LeGaulois]

Do you remember the time where so many coins were created monthly? I think this period is starting again and is even worse... if I'm correct we got over 300 news altcoins within 6 months. No need to debate to say we agree 99.99% of them are just shit. Since it's shit, they fade and die and are forgotten. Mathematically BTC's dominance increases so. Not sure if it makes sense lol