Bitcoin Dominance Reaches New Peak, Signalling a Shift in Market Dynamics

Bitcoin dominance has now reached the 70% level, which many say is the beginning of a reversal for the market dynamics. The last time dominance hit levels this high, a massive bull run in the altcoin sector began. 

This occurred in March 2017, and right after that point, Bitcoin dominance dropped off and altcoins took off. Most of the crypto-related news in the last few months has been related to bitcoin hitting certain price levels, but with the amount of work that has been done in the crypto community since the crypto winter, we are likely in for a big swing when attention does shift. 

Bitcoin serves as the natural focus for those who are not initiated in the space. It also acts as a gateway for funds to enter the ecosystem before being distributed into other areas. With exchanges like Binance or Bittrex, there is currently no fiat gateway and you need to send Bitcoin or other cryptocurrencies to trade on those platforms. 

Other Indicators and Theories

There is other data from Arcane Crypto that shows Bitcoin dominance at up to 90% when you adjust for trading volume rather than pure market capitalization. 

For altcoin owners, there are a few things to take away from all of this. First, either Bitcoin is likely to correct downwards or altcoins are likely to start increasing in price. There are some technical indicators saying Bitcoin is ready to take off, but we hear this news nearly every week. 

The second insight is that some coins are extremely illiquid after being delisted from exchanges for being subpar projects. The altcoin field is hitting a purer stage and weeding out the worst parts of the industry. This bodes well for the future of the sector and as we see more money get injected into cryptocurrencies that aren’t Ripple, Bitcoin, or Ethereum

Tether’s Part to Play

Related to this takeoff, we are seeing Tether volume continue to increase and it is now at a market capitalization of $4 billion. This is largely attributed to Chinese trading desks looking for workarounds to the local ban on fiat on-ramps. 

In China, it has 3 main uses. First, some businesses use Tether for cross-border trading. Next, there is on-ramping and off-ramping funds into the crypto space. Finally, it is being used for capital flight, since controls aren’t as effective in this shadow space and Chinese nationals can protect their savings from potential devaluation of the yuan by purchasing Tether

Tether does have its controversies, as parent company Bitfinex has been intermingling funds and also admitted that the stablecoin is not one-for-one in funds. But on the other hand, the coin has only shifted a few cents in all of August, even though demand has been spiking and the above legal troubles should theoretically have caused shifts in the price. Either way, the stablecoin is one part of the shift we will see in the cryptocurrency market as Bitcoin stops being the golden child and funds find their way into altcoins with real utility.