Noelle Acheson is a veteran of company analysis and CoinDesk’s Director of Research. The opinions expressed in this article are the author’s own.
The following article originally appeared in Institutional Crypto by CoinDesk, a free weekly newsletter focused on crypto assets. Sign up here.
Everything flourishes with a bit of attention – even attention itself.
You may have heard some rumblings recently about the bitcoin dominance rate. This measures the weight of bitcoin in the crypto universe, by taking its market cap as a percentage of the total market cap for all crypto assets. Traders and investors keep an eye on it as an indicator of market preference.
It should surprise no-one that bitcoin is the dominant crypto asset, given its long track record and mainstream media attention. What is setting off alarms is its recent ascent: it is now hovering around 70 percent, a level not seen since April 2017, just before the previous bull market took off.
Some speculate that this means another bull run is imminent, one that will push bitcoin’s dominance to above 90 percent and effectively kill off any alternative crypto asset’s hopes of capturing significant market share.
Others see it as a sign that alternative crypto assets are on the verge of a recovery as investors pivot in search of outperformance.
As with any data point, there is much open to interpretation. Chart analysis aside, market metrics are rarely useful in isolation, and to get a feel for what the bitcoin dominance rate is telling us,