Altcoin Exchange Dominance Rises to 50%, What Does It Mean for Bitcoin?
Data shows that altcoin dominance in volume on exchanges has now risen to 50%, here’s what happened to Bitcoin the last two times the crypto market saw such a shift.
Altcoins now contribute to 50% of the volumes on exchanges
As pointed out by an analyst in a CryptoQuant post, altcoins have started to dominate after Bitcoin was number one for a whole month.
The relevant indicator here is the “trading volume”, which is a measure of the total amount of coins traded on centralized exchanges.
The percentage of this total trading volume that an individual crypto contributes is called its “dominance by volume.”
Here’s a chart showing how the Bitcoin, Ethereum, and altcoin dominances have stacked up against each other over the past month:
The value of the metric seems to have declined for BTC in recent days | Source: CryptoQuant
As you can see in the graph above, Bitcoin held the largest individual share for much of the last month, but that has changed in recent days.
BTC’s dominance of falling trading volume has given more space to altcoins, which now contribute to around 50% of volumes on exchanges.
As for Ethereum, the crypto volume has not seen any significant changes lately, with the coin’s dominance moving sideways just below the 30% mark.
Over the past year, there have been two stretches where altcoins have enjoyed similar dominance. The chart below shows how the price of Bitcoin behaved during these periods.
Looks like the altcoin dominance reached as high as 60% during these stretches | Source: CryptoQuant
From the graph, it is clear that the first of these altcoin-dominated periods happened back between November 2021 and January 2022. At the beginning of this period, the price of Bitcoin was around $67,000, but by the end of it, the crypto had fallen to just $36k.
The second period of high altcoin volume took place between April and June of this year and much like the first stretch, BTC observed a significant decline as the price went from $47k all the way down to $20k.
If altcoins continue their recent rise in trading dominance on exchanges, and a similar trend as during these previous instances follows now as well, it could prove to be difficult times for Bitcoin.
Bitcoin price
At the time of writing, Bitcoin’s price is hovering around $19.3k, down 1% in the last week. Over the past month, the crypto has increased 1% in value.
BTC continues to be stuck in consolidation | Source: BTCUSD on TradingView
Featured image from Traxer on Unsplash.com, charts from TradingView.com, CryptoQuant.com
