While the bitcoin critics allege that this drop means that BTC is losing its first-mover competitive advantage, others are expecting the ‘altcoin season’ is around the corner, or might already be underway.
Bitcoin’s market dominance has continued to drop, bottoming out below 40% earlier in the week. That is quite close to the all-time low of 36.7% in January 2018 based on data from Tradingview. Bitcoin market dominance refers to the ratio that exists between BTC’s market capitalization and the total cryptocurrency market capitalization.
This is not the first time that dominance has plunged in 2021. In May, reports emerged that Bitcoin had plunged to account for only 40.3% of the cumulative crypto asset capitalization, as highlighted by Coinmarketcap. It also neared the same level again in September.
With over 16,000 alternative cryptos to choose from Bitcoin's market dominance is now below 40% for the first time since June of 2018. With an unlimited supply of easily created cryptos with virtually identical properties, #Bitcoin is losing its first-mover competitive advantage.
— Peter Schiff (@PeterSchiff) December 28, 2021
The research published by TradingPlatforms on December 27 said that the data might signal an incoming ‘alt season’. In the past seven years, the altcoin market dominance has surged threefold from 21% in 2014 to nearly 60% this month.
Ethereum’s (ETH) market dominance continues to remain above 20% at nearly $500 billion. In the past year, Ether’s market dominance has doubled from 10%.
In a December 24 tweet, Crypto analyst “Altcoin Sherpa” alleged that the ‘alt season’ has already been continuing for a whole year. They referred to a chart that was tracking Bitcoin’s market dominance indicating that the downside trade may continue into 2022.
#Altcoins: Mini thread here on 'wen #Altseason'. Alt season has been going on for an entire year, you just haven't noticed it. Here's the #Bitcoin dominance chart- you can see alts have flourished since January 2021. $BTC $ETH pic.twitter.com/c2w1PjHrqV
— Altcoin Sherpa (@AltcoinSherpa) December 23, 2021
For now, it remains to be seen whether the institutional investment will assist in putting a floor under the dominance metric. In a December 28 interview with CNBC, Noelle Acheson, Genesis Trading’s head of market insights, said that she could see major signs of institutional cryptocurrency investment growth accelerating in the coming year.
She mentioned that the amount of institutional investment growth in the crypto industry over the past 12 months has been quite astonishing.
In October, JPMorgan analysts said that the Bitcoin rally at the time was being pushed by a growing appetite from institutional investors. They said:
“Institutional investors appear to be returning to Bitcoin, perhaps seeing it as a better inflation hedge than gold.”
Based on on-chain data from Glassnode, though BTC’s near-term supply has dropped by 32%, the long-term holders added 16% to their treasuries in 2021.