3 reasons why Bitcoin is regaining its crypto market dominance
Even though it is trading roughly 60% below its record highs, Bitcoin (BTC) is regaining its lost crypto market domination.
Bitcoin’s supremacy has reached new highs in the last six months.
On May 27, the Bitcoin Market Dominance (BTC.D) index, which compares BTC’s market capitalisation to the rest of the cryptocurrency market, hit a new high of about 47%, the highest since October 2021.
Despite the fact that Bitcoin’s market cap has dropped from $1.3 trillion in November 2021 to around $550 billion in May 2022, the dominance index has risen, indicating that traders are more comfortable selling altcoins.
Let’s look at three possible reasons why traders are fleeing the altcoin market for Bitcoin’s protection.
The Ethereum “Merge” story is winding down.
The largest alternative cryptocurrency by market cap, Ethereum’s native token Ether (ETH), has shown persistent drops in market domination in the last five months, falling from 22.38 percent in December 2021 to 17.86 percent in May 2022.
The drop follows a two-year rise in which ETH/BTC increased by more than 200 percent between September 2019 and December 2021.
According to Cointelegraph, Ether has outperformed Bitcoin in recent years, owing to the excitement surrounding its long-awaited protocol change, dubbed “the Merge,” which aims to make Ethereum more scalable and affordable.
However, the upgrade, which attempts to convert Ethereum’s blockchain from proof-of-work to proof-of-stake (a counterpart known as Beacon Chain), has been delayed several times.
Martin Köppelmann, co-founder of the Ethereum Virtual Machine (EVM)-compatible Gnosis chain, reportedly mentioned a seven-block reorganization on the Beacon Chain, implying that the chain “forked” momentarily during its testing period.
According to OxHamZ, an independent market analyst, Ethereum lacks narratives to propel ETH’s price upward following the Merge update, as investors have already “priced in” the network upgrade hype.