Bitcoin, the original and most popular cryptocurrency, may start to lose its shine.
The market dominance of Bitcoin, or the percentage that represents the market capitalization of Bitcoin for the full market capitalization of cryptocurrency, fell 2% since last Monday to 62% while ETH and other altcoins caught the market’s attention.
The hot new trend of DeFi tokens leads the attack and pushes back Bitcoin’s dominance.
Fed by outsize agricultural yield back and a host of budding experiments in it decentralized lendingsigns point to the revival of the alt season, with all the fear of missing (FOMO) and fear, turmoil and dissent (FUD) accompanying it.
So, is Bitcoin going out of fashion or have we been here before?
Bitcoin dominance: a brief history
Bitcoin’s dominance has only dropped below 50% once before, triggering the 2017 ICO craze, with hundreds of altcoins making fortunes and breaking the hearts of others.
But for years, Bitcoin was the most powerful cryptocurrency. Bitcoin’s dominance remained above 98% for the first few years of its existence. During this period, a handful of alternative crypto assets were released, including Litecoin, Ripple, Ethereum and Elon Musk’s recent favorite, Dogecoin.
BTC’s dominance declined to 95% in the summer of 2016 and nine months later – a few weeks after 2017 – began a sharp decline that coincided with the original “alt season, Where huge amounts of investment focused on new crypto assets.
From February 2017 to January 2018, Bitcoin dominance dropped from more than 95% to a low of less than 37% as prices for cryptocurrencies such as Ethereum and Monero rose to levels not seen before or since.
During that period, ETH prices rose a whopping 13,400% from less than $ 11 to more than $ 1,440 less than a year later. By comparison, Bitcoin grew by more than 1,850% in the same period – hardly a return to put your nose up, but far from the ETH rocket ship.
Such prices were not intended. Throughout 2018, ERC20 tokens and other cryptocurrencies lost value about as fast as they had gained, with ETH losing over 90% of its value by the end of the year.
Bitcoin performed slightly better, losing about 80% of its total value over the same period. At the time, Bitcoin had dominance increased back above 50%. The recovery continued the rest of the year, and by the last days of 2019, Bitcoin’s dominance had risen to nearly 70%.
But again, newer, more versatile tokens are starting to prove their worth. Bitcoin cannot participate in DeFi, which mainly lives on Ethereum. So, how long will Bitcoin be able to remain relevant?