One of the major themes that has arisen since the price of bitcoin crashed to under $6000 in early February has been an increase in the dominance of Bitcoin. Whilst in early January total bitcoin dominance was below 32%, as of the time of writing, bitcoin comprises some 40% of the total market capitalization of all cryptocurrencies!
In this article I’m going to explore why this has happened, and why I think it to be a bad omen for the cryptocurrencies in general.
Bitcoin dominance: What happened, and why?
First of all, I want you, the reader, to chose between two narratives to explain the recent increase in bitcoin dominance. You have two choices. Option #1, the ‘pro bitcoin’ narrative:
“Bitcoin dominance is increasing as investors realize that bitcoin is the original and best cryptocurrency out there! They are rightly allocating their capital back to the most reliable and famous coin, because they have discovered that other coins are not as reliable, stable or big enough to deserve their investment. Furthermore, recent segwit adoption has strengthened Bitcoins appeal”
Option #2, the ‘’fear trade’:
“Investors have pivoted out of speculative alt-coins and back into bitcoin, because they see bitcoin as…