Bitcoin’s dominance rate reached a high of 2 months in CoinMarketCap today. A sign that investors are likely to be switching their money from altcoins to BTC.
Indicators are up to 42.74% today. This is the highest level since April 14 when it was within 42.5%.
What Is The Dominance Rate?
It is an indicator that tracks the percentage of the total capitalization of the cryptocurrencies market contributed by the leading cryptocurrency. An increasing rate of dominance means that the demand for bitcoin is greater than the demand for altcoins.
A flow toward bitcoin is usually seen at the start of the bull run, as it’s a common route for fiat money to enter the cryptocurrency market.
Last year, BTC’s dominance rate increased from 38 % to 66.5 % in six months, driving its value up from $1,760 to $20,000.
Correction and Dominance
Dominance also tends to increase during periods of risk aversion; when investors abandon high-risk altcoins and switch to bitcoin or eventually to fiat currency. We are currently going through this period.
In the last two months, BTC has fallen from $9,990 to $5,755 and yet BTC’s dominance rate has gone from 35.78% to 42.75%. Right now, many investors are preferring cash over crypto-assets.
If prices start to rise along with BTC’s dominance rate, it means that the cryptocurrencies markets have bottomed out.