Bitcoin Dominance Plunges To 48%, First Time Since 2018: What Does This Mean?

After surging to all-time highs in the past seven months, Bitcoin is slowly showing signs of weakness.

The largest cryptocurrency has hit recent lows in the past weeks, plunging near $47,000 early Friday, and in the process diminishing the so-called "bitcoin dominance," or the ratio of BTC's value to the overall market capitalization of digital currencies. It has fallen to as low as 48% for the first time since 2018, Coindesk reported.

The price drop in Bitcoin came as Ether, the second-largest cryptocurrency belonging to the Ethereum blockchain, soared to a new record high of $2,607, or up 256%. Technical indicators project bullishness for ETH, to reach $2,725 and potentially $3,210 since bouncing off the resistance level of $1,400.

However, Bitcoin’s market value which currently stands at $931 billion still constitutes a large part of CoinGecko’s basket of 6,831 digital coins with a total market value of $1.9 trillion. Ether’s market cap share is about 14%.

While Bitcoin's supremacy in the cryptocurrency market may have been tempered, it still is up 88% this year following its record-breaking $65,000 price in April. It has since faded to around $55,000 amidst traders boosting the prices of other cryptos such as Dogecoin.

DOGE, which started as a meme cryptocurrency and for over seven years was priced at only $0.05, has surged by 18,450% to almost a dollar in just a year. It has climbed 50-fold in 2021.

The rapid acceleration in cryptocurrency prices is reminiscent of the last big bull run in 2017 and early 2018, highlighted by a spate of so-called initial coin offerings (ICOs), many of which resulted in huge losses later in 2018.

Fundstrat analyst David Grider told CoinDesk in an email, “it’s a signal the market is risk-on and ‘alts’ are outperforming.”

The silver lining of a weakening Bitcoin is other cryptocurrencies getting the opportunity to boost their values, which some traders have been waiting for years.