From the first week of June to the present, Bitcoin’s dominance has plunged seamlessly to record lows.
What is dominance and what is its relationship to Bitcoin
Dominance is measured in percentages and is determined by the ratio of asset capitalization to total market capitalization.
It could also represent how appealing a particular security, currency, index, and whatever else is to investors.
In the case of cryptocurrencies, dominance determines interest in a particular coin and is calculated by comparing its market capitalization to that of all other existing altcoins.
The University of Cambridge defines it as a datum that determines the appeal of something or someone, and in the specific case, the currency with the highest capitalization of course is Bitcoin, although at this time it is Ethereum actually capturing all the attention of investors in view of the major changes toward which it is heading at a rapid pace and which will see the light of day within this month.
Bitcoin’s Dominance is the benchmark figure in the world of digital currencies and is recognized by the acronym BTC.D.
The Dominance of Bitcoin
The cryptocurrency that has always boasted the largest capitalization is Bitcoin, but lately its Dominance is not as bright as it used to be, even though it remains the most widespread and widely used virtual currency in the world.
Bitcoin’s capitalization ranks first on CoinMarketCap with $362,384,604,482 and a circulating supply of 19,143,606 BTC out of a total of 21,000,000 BTC.
This year, Bitcoin’s appeal to senior or junior investors, while remaining constant, had started with values close to the lows since 2018 to date, standing at around 39/40%, to be precise. The 2022 low for now was that recorded on 16 January when the figure stood at 39.36%.
Bitcoin’s share of the overall cryptocurrency market capitalization records four-year lows, the weakest figure since June 2018 according to CMC.
This year’s high for Dominance was reached on 11 June and was 48.36%, but from that date to the present, the figure has seamlessly descended to 39.53% today, levels seen only in mid-June and which are very close to the 2018 lows.
After piercing the $20,000 resistance and the $19,000 resistance today the currency stands at $18,723, a third of the value it could boast in June of the previous year.
The crypto market eventually managed to preserve the 200-week moving average (MA), an important achievement in bear markets, although BTC/USD did not have quite the same fate.
The flat calm for both Ethereum and BTC among discerning investors does not help, and neither does the Federal Reserve’s aggressive monetary policies announced and undertaken by Jerome Powell.
The president of the US Central Bank at Jackson Hole said he is determined to persist with an iron fist in his rate hike policy, and analysts predict that at the upcoming FOMC in September, the choice will fall on a 75 basis point hike, a value that the market should have already discounted.
Market downturns are affecting the value of the digital currency by negatively affecting the value of the coin to the extent that it has reached today’s value.
What will happen after the Merge to the dominance of the major crypto?
The hype that currently pervades Ethereum and the Merge it is about to take in rapid steps is well-founded and is the idea that investing in ETH at a good price before this transition can be a very profitable investment.
This buzz takes away some of the attention toward Bitcoin, which, despite everything, is patiently waiting its turn knowing that regardless of how the Merge goes, BTC will be able to recover capital quickly after this transition.
The consensus view among investors is that after Buterin’s currency moves to Proof of Stake, capital will flow back to the currency with the largest capitalization.
Bitcoin could dump as low as $16,000 and some even go so far as to speculate $10,000 as an achievable target, but this is not the only hypothesis on the table.
BTC could regain dominance and rise to important heights that analysts place as high as $35,000/$38,000, not without veiled optimism.
The reality is that no one can know what BTC will do after the Merge.
Protecting oneself from volatility by opening both short and long positions with stop losses at the levels that are deemed acceptable could lead to missing out on attractive opportunities, but it could also save portfolios from major price changes that could mean serious losses.
How exchanges are behaving in the run-up to the Merge
Many exchanges have considered safeguarding their clients by blocking ETH buying and selling operations. This has been frowned upon by many investors who, of course, would prefer not to have their hands tied at times when being timely could make all the difference.
The thing that could help in this regard may be moving ETH to wallets such as MetaMask or others so that they have full control.
According to the famous trader Ched, keeping an eye on the 8-day exponential moving average (EMA) is very useful for guessing the direction of BTC.
The Merge is near and in anticipation of that, there was the last Bellatrix upgrade yesterday before the final Fork that will create a new and greener ETH with no mining.
The wait will be short as everything is expected to be accomplished between the 10th and 20th of this month. After that we will get a better sense of the direction Bitcoin will take and how its Dominance will hold once investors’ attention shifts from ETH to BTC.