Why bitcoin’s dominance is down in this bear market

Starting last year, when bitcoin — and crypto in general — rode the wave of exorbitant prices, the dominance of the world’s leading crypto took a dip as money poured into altcoins and other crypto tokens.

In fact, bitcoin’s dominance dropped significantly from 63% in January 2021 to just 42% by May. It then fell further to a low of 40% during December.

The altcoin bull run that followed bitcoin’s price rise last year was a widely expected and predictable reaction to the currency’s rising value. What was not expected: that bitcoin’s dominance remains low in a bear market. Bitcoin dominance currently stands at a surprising 38% and there are various factors keeping it low compared to the previous bear market of 2018.

Altcoins are stronger and bigger, especially Ethereum

This will cause consternation among bitcoiners who cheer bear markets for their devastating impact on anything but their chosen coin. But in relative terms, some altcoins, especially ether, are doing much better than they did in the previous bear market. In addition, there are many more altcoins than before.

Ether fell more than 90% from its all-time high of more than $1,300 in January 2018 to end the year at around $83. Currently, Ether is down about 73% from November of last year, sitting at around $1,230.

Ether’s dominance is also down from its June 2017 peak of 25% to around 18% today. So, while ethereal dominance isn’t at bull market peaks, it’s still higher than its previous bitcoin bear market lows which was less than 10%.

Stablecoins are huge

An obvious and visible factor that keeps bitcoin dominance relatively low is that The stablecoin market has also grown significantly. Tether is the third largest crypto token after ether by market capitalization and currently accounts for almost 8% of the entire crypto market. Next up is Binance’s BNB coin, but after that is USDC, which makes up 5% of the market, and then Binance USD.

Bitcoin is losing its safe haven bid to gold

One of the main characteristics that has always set bitcoin apart from altcoins is that it is marketed as a safe haven like gold. This is in contrast to altcoins which are considered to be more speculative.

But in these times of global turmoil, bitcoin is losing its safe haven status to gold. Bitcoin is down 62% since the beginning of the year, while gold is only down 1% in the same time frame.

Read more: Bitcoin trackers reveal Saylor and El Salvador both straight

Is bitcoin no longer cool?

When bitcoin loses its safe haven bid to gold, what can it be used for other than speculative purposes? Of course, it can be used for money transfers, but stablecoins can be better for such a purpose as they are less volatile.

And on the speculative front, gamblers may be much more enticed by potential altcoin gains than bitcoin’s gigantic dream of reaching the $100,000 mark. Apparently, bitcoin is losing out on many fronts, both to rival cryptos and to more traditional assets like gold.

Only time will tell if the world’s largest crypto can make a significant comeback and once again hit the dizzying heights in 2021, but so far it looks a long way off.

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