Bitcoin remains the most prominent cryptocurrency, although its dominance has decreased significantly in recent months. In the first decade of Bitcoin’s unveiling, it accounted for over 50% of the crypto market. At some point, Bitcoin’s market capitalization rallied beyond 70% of the total crypto market cap. 

However, the trend has significantly changed in recent months, mainly due to increasing pressure from altcoins. The rapid creation of numerous altcoins has increasingly diversified the market, dropping Bitcoin’s dominance level to about 42.7%. However, Bitcoin still commands a significant market cap of over $1.1 trillion. 

How Bitcoin Dominance Works 

Cryptocurrencies are relatively new but, there is an observable pattern of money flows in the crypto cycle. Money usually flows when investors move their investments to minor risky assets. Investors typically start by buying Bitcoin with fiat currency. Many more investors rush to acquire Bitcoin as its price grows, rallying its value to new heights. 

However, that trend also attracts other altcoins, pushing the Bitcoin price even higher. As soon as the Bitcoin price starts to fade, investors start moving their profits into large-cap altcoins such as Ether and Polkadot. That switch induces money flow into altcoins, edging Bitcoin’s market dominance. 

The Significance of Bitcoin’s Dropping Market Dominance 

Bitcoin’s value reached a new all-time high of more than $67,000 a few weeks ago, and it has been trading above $60,000 since then. However, several other altcoins, including Ethereum, Shibu, Polkadot, and Solana, have also reported new all-time highs during the same period. Currently, Ether is Bitcoin’s most significant competitor, whose dominance level has also significantly increased in recent months. 

Experts believe Bitcoin’s market dominance could decline below 40% if the current trend continues. Alternatively, the market dominance of altcoins like Ether and Solana would increase as their adoption grows. However, market analysts predict the trend will likely persist for the short term. Bitcoin’s declining market dominance is indicative of altcoins’ growing adoption. 

Leading crypto exchanges such as BitIQ have echoed similar sentiments, citing increasing altcoins’ trading volumes. Investors too have increasingly expressed altcoins’ excellent use cases in the market, sometimes preferring to invest in them over Bitcoin. 

The gaming tokens have also seen significant gains due to Bitcoin’s declining market dominance. Apart from Ether that has climbed 2.4% in the past week, Solana’s SOL token has gained 21%, while Enjin gaming token rose by 28%. Those altcoins have impacted intense pressure on the market, making it difficult for Bitcoin to maneuver. 

While Bitcoin’s declining market dominance sends shockwaves across the crypto market, investors insist it is not something new. They say the trend has occurred several times in the past years. As altcoins stopped appreciating, Bitcoin inevitably reasserted its market dominance. Thus, they expect Bitcoin’s rally to pick up in the next few weeks. 

Bitcoin’s value is appreciating despite the declining market dominance and, that is good news to investors. One of the reasons for that is the speculation that the US government could soon approve a Bitcoin futures exchange-traded fund (ETF). That would allow large-scale investors and institutions to gain exposure to the new asset class without risks such as security and custody. 

Large institutional investors have been waiting with bated breath for a regulated way to gain exposure to Bitcoin. Concerns over high inflation in the United States have also contributed to Bitcoin’s latest rally since many investors consider it a more viable inflation hedge. Investors are increasingly adopting Bitcoin to shield their portfolios from inflationary risks. 

While Bitcoin’s market dominance is falling, it is a temporary decline that should not cause panic in the market. Bitcoin may be losing market dominance but, its price continues to grow by the day. Thus, it remains the gateway to the crypto world and the most profitable cryptocurrency.