Bitcoin dominance drops below 40% for the first time since January
ETH Miner balances at all-time highs ahead of the merger
Bitcoin dominance (BTC.D), which is the market value of BTC relative to all digital assets, has fallen below 40% for only the second time since 2018 and is at an eight-month low, according to data from CoinMarketCap.
The move contrasts with the last crypto bear market that started in 2018 and saw BTC.D rise through the carnage to over 70% in September 2019 as alternative crypto assets collapsed in price.
Emergence of the Ether
Perhaps predictably, Ether has emerged as a primary force driving BTC.D near all-time lows. ETH dominance (ETH.D) stands at 20% as of August 30 after crawling up from a low of less than 8% in the last quarter of 2019.
ETH.D has not collapsed with the bear market – instead, it has held its approximate 20% level since November 2021, which marked the peak for crypto as a whole when the market cap of all digital assets just pushed past $3T.
BTC.D has been roughly stable since May 2021.
The ETH/BTC ratio, which is the price of ETH against the price of BTC, closely mimics the ETH.D chart. The two largest cryptocurrencies account for 60% of the market — ETH’s ratio to BTC largely dictates how dominant it is in the overall crypto market.
ETH has fallen 59% in the past year, according to The Defiant Terminal. Despite that, it has maintained its level of roughly 20% dominance, as all major digital assets have lost comparable amounts of value in that time frame.
ETH priceSource: The Defiant Terminal
Funding at 14-month low
Funding rates for ETH have also hit a 14-month low, according to an August 28 report from a passing crypto trader Maartunn.
When funding rates on perpetual futures for an asset are negative, it indicates an excess of sellers, and traders are paid to go long. As Maartunn noted, the last time funding rates were this low on ETH in July 2021, the asset spiked shortly after in a short squeeze.
Miner balances, the amount of ETH held by miners, have also more than doubled from 114,255 to 261,849 in the past year, according to data from OKLink. This may indicate that miners are bullish ahead of the merger as they choose to keep their ETH block rewards instead of selling tokens.
With the first phase of the long-awaited Ethereum upgrade just a week away, anticipation appears to be driving ETH’s price action, as traders have also placed bullish bets through derivatives.
Previous cycle
Bitcoin dominance has remained below 50% for 15 months now, a first for the crypto-asset.
BTC.D’s all-time low of 36.83% came on January 8, 2018, at a time when other digital assets, sometimes referred to as “altcoins,” had soared.
And they certainly did. From December 8, 2017 to January 8, 2018, ETH rose 145.8% to $1,185 from $482. Then the third largest digital asset Ripple (XRP), which aims to be used as a currency for financial institutions, pushed almost a decimal point to the left, rising to $2.14 from $0.24.
January 2017 marked the peak of the last crypto bull market. BTC.D then worked its way back to over 70% in August 2019 as the world’s largest cryptocurrency dipped, but altcoins were decimated.
Now the crypto market is bleeding again, having lost over two-thirds of its value since its peak in November 2021. But this time, BTC.D has hovered around 40%, potentially signaling a less dominant era for what is currently the world’s largest cryptocurrency.
