Bitcoin Dominance rising again. What is happening?

[fillippone]

Updating this thread.
The one with Bitcoin dominance is a strange love-hate relatioship.
Love, because we all love looking at bitcoin dominance going up
Hate, because we all know how much this is a shitty metric to look Bitcoin at.

Last tweet I saw about it:

Cryptocurrencies' market capitalization is now totaling $270.13 billion

The sum of the trading volume during the last 24 hours was equal to $105.93 billion

It's worth mentioning that current Bitcoin $BTC's market cap share is at 65.05%

https://twitter.com/CryptoGulp/status/1267101164618878976

Here it goes the usual graph from Coinmarketcap form the last year:



Deducting somethin meaningful from this random noise goes well above my abilities.
Even trying to zoom in with a more detailed graph, adds little context in my opinion:



Even thou I saw twitter accounts trying to sell a "mini-altseason" rhetoric on that graph, it really looks white noise to me.


What I see in the last month or so, after the halving btw is that BTC gained against every other coin, except ETH:



This is what it counts to me.

A a last warning about the buzz we will hear on dominance on the next few weeks, I almost missed the news of Bitfinex launching a deriviatives contract on dominance:

Bitfinex Now Has a Derivatives Contract Offering Exposure to Bitcoin Dominance

A new derivative from Bitfinex allows investors to take a position on bitcoin’s overall share of the cryptocurrency market.

The Seychelles-based crypto exchange said Wednesday the BTCDOM contract would allow investors to bet on bitcoin’s dominance rate – a metric for determining the market’s bitcoin value versus the value of other cryptocurrencies.

The first of its kind, BTCDOM is a perpetual swap – a future without expiry date – that relies on a proprietary Bitcoin Dominance Index, comprised of seven of bitcoin’s most liquid trading pairs, including those with large-cap coins, such as ether, EOS, litecoin and XRP.

This means we wil hear more about dominance, as most traders will try to "play" other actors into this metric.

[deisik]

Updating this thread.
The one with Bitcoin dominance is a strange love-hate relatioship.
Love, because we all love looking at bitcoin dominance going up
Hate, because we all know how much this is a shitty metric to look Bitcoin at

I don't think it is correct to include USDT in the distribution

Stablecoins, and especially centralized stablecoins like USDT, are essentially proxies for fiat currencies (in this case the American dollar), and counting them in severely distorts the picture. It is like counting all dollars (euro, yuan, whatever) spent on cryptocurrencies. In this manner, stablecoins should be subtracted from the total market cap (or not included in the first place), as it is the same as counting bitcoins twice. It makes no sense. I know that stats wouldn't look as pleasing without them, but the data will be more real

[fillippone]

Updating this thread.
The one with Bitcoin dominance is a strange love-hate relatioship.
Love, because we all love looking at bitcoin dominance going up
Hate, because we all know how much this is a shitty metric to look Bitcoin at

I don't think it is correct to include USDT in the distribution

Stablecoins, and especially centralized stablecoins like USDT, are essentially proxies for fiat currencies (in this case the American dollar), and counting them in severely distorts the picture. It is like counting all dollars (euro, yuan, whatever) spent on cryptocurrencies. In this manner, stablecoins should be subtracted from the total market cap (or not included in the first place), as it is the same as counting bitcoins twice. It makes no sense. I know that stats wouldn't look as pleasing without them, but the data will be more real

I totally agree.
This is another reason why market dominance is a very biased indicator.
USD is the fourth market cap "crypto" accounting for almost 3% of total market capitalisation.
I think subtracting it from total market share would make the indicator overall better, but wouldn't dramatically change the situation. Also please note the image and data all include Stablecoins in total market capitalisation , and I haven't the possibility to exclude them.
In the coin360.com graph it is actually possible to hide UST from the picture, but alas it is included in the final computation.

[lumeire]

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.

I guess the developers of the altcoins aren't as perseverant as the developers of bitcoin are. All the altcoin developers do good in the start and then if the altcoin doesn't perform well then they lack interest in that project and try to find another project to make some money.
Also as the price of bitcoins is increasing but the Altcoins are at the same price or many of them are in negative so people are loosing their interest in altcoins and are selling their alts to buy bitcoins.

[sana54210]

Updating this thread.
The one with Bitcoin dominance is a strange love-hate relatioship.
Love, because we all love looking at bitcoin dominance going up
Hate, because we all know how much this is a shitty metric to look Bitcoin at

I don't think it is correct to include USDT in the distribution

Stablecoins, and especially centralized stablecoins like USDT, are essentially proxies for fiat currencies (in this case the American dollar), and counting them in severely distorts the picture. It is like counting all dollars (euro, yuan, whatever) spent on cryptocurrencies. In this manner, stablecoins should be subtracted from the total market cap (or not included in the first place), as it is the same as counting bitcoins twice. It makes no sense. I know that stats wouldn't look as pleasing without them, but the data will be more real

USDT is there because it is considered a currency as well and it is backed by blockchain as well so there is really no reason to not include it. However it is also pegged by dollars as well so it is not really going to change in levels neither, it is always going to be the same price year in and year out every single second. Sure there are times when it goes down a bit but it never goes down too much, same with going up as well.

At the end of the day I agree that it should not be calculated when you are looking at the dominance. USDT is just a stable coin that is there to help people trade bitcoin easier instead of changing it back to fiat which is hard normally without USDT, it is not really a coin to invest or a coin to promote, it is one that you use purely for trading reasons.

[deisik]

Updating this thread.
The one with Bitcoin dominance is a strange love-hate relatioship.
Love, because we all love looking at bitcoin dominance going up
Hate, because we all know how much this is a shitty metric to look Bitcoin at

I don't think it is correct to include USDT in the distribution

Stablecoins, and especially centralized stablecoins like USDT, are essentially proxies for fiat currencies (in this case the American dollar), and counting them in severely distorts the picture. It is like counting all dollars (euro, yuan, whatever) spent on cryptocurrencies. In this manner, stablecoins should be subtracted from the total market cap (or not included in the first place), as it is the same as counting bitcoins twice. It makes no sense. I know that stats wouldn't look as pleasing without them, but the data will be more real

USDT is there because it is considered a currency as well and it is backed by blockchain as well so there is really no reason to not include it

People are selling cryptocurrencies for USDT when they want to fix their profits in the American dollar, which is also a currency. Further, USDT is not a standalone currency as it simply represents the dollar in the cryptocurrencies market (which you seem to understand). So, if we assume that USDT is rightfully included in the mix, then we should also include all the dollars traded for bitcoins, as USDT necessarily represents a certain portion of this exchange. Put shortly, you can't have it both ways in a meaningful way, while including all dollars would render the entire stats less than useless

Unless your sole intention is to come up with more formidable numbers, of course

[STT]

USDT is not backed by the US government so it is a cryptocurrency in that it depends on that blockchain and its integrity.   I'd rather disallow every blockchain that is reliant on a centralised source, so that'd take XRP off the charts.   Too radical for anyone to agree with but correct perspective imo.

[fillippone]

USDT is not backed by the US government so it is a cryptocurrency in that it depends on that blockchain and its integrity.   I'd rather disallow every blockchain that is reliant on a centralised source, so that'd take XRP off the charts.   Too radical for anyone to agree with but correct perspective imo.

Guys, don't forget what shitcoins means. That the are, actually, shit.
So trying to differentiate why they taste differently might be an interesting excercice, but the result do not change: they are shitcoins.
Also this is why dominance is a flawed indicator: you are comparing Bitcoin with shitcoins, as if you could draw any interesting conclusion comparing the two.

[deisik]

USDT is not backed by the US government so it is a cryptocurrency in that it depends on that blockchain and its integrity

Surprise, American dollars are not backed by the US government either

It just happens to be printing them, sometimes out of thin air. If you disagree, what does it back them up with then? Further, let's proceed with the fact that USDT is not even a currency. The point is that it can't possibly be a cryptocurrency while not being a currency. It is essentially a token which gets traded here and there. However, a token is not a currency because it is simply a digital representation of some asset, and this asset in case of USDT happens to be the dollar. This is what Tether says, which also claims to be backing it up with real dollars. Are you going to challenge their claims?

[dragonvslinux]

This time is different and in this market BTC is growing more than alts.

Ok I finally read it, most of it anyway 

I've heard this type of phrase before, it goes into my list of "this time is different" scenarios.

• "This time it's different" regarding Bitcoin.
• "This time there won't be a bubble in cyrptocurrency"
• "This time people won't over-speculate"
• "This time people will be sensible"

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.

So everyone has learnt their lesson, like they did in 2014 you mean? Like they did in 2018 you mean? Like they will in 2022 you mean? I don't get this backwards thinking. Nobody has learnt anything sensible, only that the more risk you take the more you have to gain - as well as the more you have to lose (the latter usually comes later though!). 2018 proved that in 2014 new investors learnt nothing. This is because new investors drawn into a bubble know very little, apart from how much money they could make. Older investors who have experienced bear markets instead know how much money they could lose, and are therefore much wiser, speculating much less or not at all into altcoins.

More relevantly, as referenced elsewhere, altcoin dominance has nothing to do with altcoin value, but instead short-term speculation. To explain this simply, it's due to the "production rate". Each cycle has seen a different breed of altcoins gain dominance, and subsequently lose it (usually only to crash and burn into nothing). We've seen this twice already, but overall altcoin dominance is still in a long-term bullish trend upwards - which is made possible by the generation of new altcoins that continue claiming dominance (this year it is/was DeFi by looks of it), with the older altcoins manage to hold onto a fraction of the dominance they once had - causing the overall long-term increase in altcoin dominance. Not value.

If you want a metric for altcoin value, then ETH.D (Ethereum dominance) would be a better place to look imo, as it's the no.1 altcoin that's actually stuck around for the time being.

PS - Somethings are just easy to predict, as they repeat themselves with the same rhythm

Call it a "lucky guess" if you like, but as documented in the TA from October last year, this was based on the same metrics occuring as late 2015 (unsurprisingly, 4 years later).

[okala]

I am not surprised seeing bitcoin dominating the market again and again. It is the best cryptocurrencies that we can see has lasted long term and having consistently progress. If you had of cryptocurrencies the number one thing that always comes to your mind is bitcoin.

[fillippone]

Jameson Lopp has something to say about dominance:

A fresh new take on Bitcoin Dominance that makes it a slightly less stupid metric. https://bitcoindominance.com

https://twitter.com/lopp/status/1288812356190048262?s=20



On https://bitcoindominance.com we see a new, improved computation of dominance based on the Real Bitcoin Dominance Index:

The Real Bitcoin Dominance Index calculates Bitcoin's market share among proof of work coins attempting to be money. It excludes all ICOs, stablecoins and other centralized projects.

What Makes this Dominance Index Different than CoinMarketCap?
The Real Bitcoin Dominance Index only includes coins using proof-of-work that are attempting to be money.


It does not include ICOs or stablecoins.

BAsically, leaving only PoW coins and exluding ICO and Stablecoins (+Ethereum as an options) this index tries to compute only the true decentralised projects. The only one that matters in terms of cryptocurrencies.

[ultrloa]

I am not surprised seeing bitcoin dominating the market again and again. It is the best cryptocurrencies that we can see has lasted long term and having consistently progress. If you had of cryptocurrencies the number one thing that always comes to your mind is bitcoin.

Actually this series has been repeatedly happening in the market scene so provably people those see this as new thing in the market except for those new people coming here, so for this we can really trust bitcoin simce whenever downfall came a golden opportunity will came for us to recover its just we need patience and long hold for this to gain profit and success.

[exstasie]

On https://bitcoindominance.com we see a new, improved computation of dominance based on the Real Bitcoin Dominance Index:

The Real Bitcoin Dominance Index calculates Bitcoin's market share among proof of work coins attempting to be money. It excludes all ICOs, stablecoins and other centralized projects.

BAsically, leaving only PoW coins and exluding ICO and Stablecoins (+Ethereum as an options) this index tries to compute only the true decentralised projects. The only one that matters in terms of cryptocurrencies.

Doesn't seem very useful to me. Removing everything but POW coins is just a way for Bitcoin maximalists to feed their biases. It doesn't tell me anything useful about the market in terms of trading and hedging.

The point of measuring dominance is to give a holistic view of global trends in the altcoin market, not to make political statements about decentralization.

[dragonvslinux]

On https://bitcoindominance.com we see a new, improved computation of dominance based on the Real Bitcoin Dominance Index:

The Real Bitcoin Dominance Index calculates Bitcoin's market share among proof of work coins attempting to be money. It excludes all ICOs, stablecoins and other centralized projects.

BAsically, leaving only PoW coins and exluding ICO and Stablecoins (+Ethereum as an options) this index tries to compute only the true decentralised projects. The only one that matters in terms of cryptocurrencies.

Doesn't seem very useful to me. Removing everything but POW coins is just a way for Bitcoin maximalists to feed their biases. It doesn't tell me anything useful about the market in terms of trading and hedging.

The point of measuring dominance is to give a holistic view of global trends in the altcoin market, not to make political statements about decentralization.

Just seems a bit odd to me, and clearly doesn't include all POW coins (which would take forever to research) but instead less a dozen. See: https://www.crypto51.app/

It is almost interesting though, I felt (real) BTC dominance had a good chance of re-testing the 2016 lows around 80% before further downside, but this other chart now makes it look less likely. It shows these lows instead at 83% and dominance already re-testing these levels and facing harsh rejection. The only bullish view for this so-called dominance chart is removing ETH from that index which paints a completely different picture, and does make it took like the Top 11 POW altcoins will face more downside. If the point of that chart is to show that the (generally) older generation of altcoins get swept away by the newer generation, then I guess it's valid, but better ways to represent this imo.

I'd only really be curious to see where the bearish sloping 200 Week MA is on that chart, and whether price is above it also or getting knocked down by it.

[fillippone]

Bend the knees to the King bitcoin:



The futility of the shitcoin has been confirmed on this triple ATH.

Dominance is rising, and other coins are struggling to get lifted, if not properly sinking, like XRP.

Market dominance has been constantly for the last months, and now has just passed 70% for the first time in many months.



No point in diversifying in crypto. High correlation, higher volatility, lower returns.

[freedomgo]

Before 90% dominance there's every chance we're going to see more altcoin price crashes, until we have a clean house.

That is way to extreme. In a way as CMC currently measure  will crypto dominance we never see Bitcoin at 90% again. Probably 75% is its limit. And after Bitcoin reach new ATH at $20000 it will start drastically decrease.

I also think so, currently, BTC dominance has already climbed to 70% as per CMC and altcoins are still lagging behind, if it will reach to 80%, I don't know how would altcoins will look like, the weak will not survive while the major altcoins will certainly struggle.

[El duderino_]

What are your toughs?

[fillippone]

<...>

This!

I I think it was my third post here on bitcointalk:

preface:
I think ALL altcoins are basically worthless.
<...>
Bitcoin is a huge bet but while I don’ know if in 10 years bitcoin would be worth 1 million or zero (or course I have an idea), I am absolutely sure that in 10 years every present shitcoin (all of them, but bitcoin) will be worth ZERO.

After so many years I understood the single use case for every shitcoin: trading.
Apart from this, where everything that moves with high volatility would suffice, I still believe my above statements are hugely correct, and nobody has been capable to change my mind, yet.

[kapalmabur]

only one thing that happens, Bitcoin is still in a super bullish,
we will not be able to see a decline in bitcoin dominance if Bitcoin is still not saturated,
even though dominance is back at support, it will definitely go back up again, it is not certain when the bullish switch to altcoin.