Bitcoin is now dominant, so what about?
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This article from Coindesk , the original author: Noelle Acheson
Odaily Planet Daily Translator | Moni
Recently, there have been some voices in the industry that “bitcoin has to dominate the cryptocurrency market.” If we use the market value of Bitcoin to account for the weight of the encrypted world in terms of the total market capitalization of the crypto assets, yes, Bitcoin won.
But is this “market power dominance” really a good thing?
As the market value of Bitcoin continues to rise, prices have begun to sing against it. At the time of this writing, CMC data shows that bitcoin prices have fallen below the $10,000 mark, which is about $9956.06, with a 24-hour drop of 5.65%.
In fact, the market capitalization ratio is indeed a market preference indicator that traders and investors pay close attention to. If we don’t consider the “catch period” before the bull market in 2017, you will find that Bitcoin’s recent market capitalization ratio has been hovering around 70%, and it has never been the level since April 2017.
Top: The trend of total market capitalization of Bitcoin in the cryptocurrency market since 2013 (Source: CoinMarketCap.com)
WithThe market value of Bitcoin continues to rise. Some people think that this may indicate that another bull market is coming, and may even push the dominant position of Bitcoin to over 90%. Other alternative encryption assets (such as altcoin) want Getting more market share will also become more and more difficult; but others feel that as more and more investors want to get a higher return on investment, they will also prefer to choose a more speculative alternative encryption asset, and then Promote the recovery of the altcoin market.
It is undeniable that any market indicator has a variety of interpretations, but analyzing a single indicator in isolation may not yield accurate results. Therefore, in order to understand what “market dominance” represents, we need to analyze it more deeply. Maybe for Bitcoin and the entire cryptocurrency market, the rise in this indicator is not good news.
First, do you know that everyone knows that Bitcoin is the leader in the cryptocurrency market? Of course not, so this may be one reason why Bitcoin market capitalization ratio indicators are still being watched.
In fact, Bitcoin market capitalization ratio is a relative measure that reflects market preferences, market beliefs, and market trends.
Prices are usually an indicator that directly reflects the popularity of Bitcoin, while the “dominant” indicator is used to assess the popularity of Bitcoin relative to other cryptographic assets. In theory, this could mean “quality leap” because investors are affected by market risks and convert some of the less secure assets into “safer” assets. In addition, this indicator may also represent a growing interest in the entire encryption industry, and believe that Bitcoin has the most powerful fundamentals.
In either way, from an investor’s perspective, Bitcoin is the most attractive of all crypto assets. (It is important to note that as prices fall, market dominance may increase, and as prices rise, dominance may also decline – this is a relative rather than an absolute indicator.)
The market value ratio also reflects people’s market sentiment. Because of the relative liquidity, history and network size, people often think that Bitcoin’s speculativeness is relatively small, and its growing market dominance also reflects. The fundamentals are relatively “safe.”
Although not necessarily predictive, emotional indicators are often recursive—you can’t be sure if the trend will continue, let alone have energy, but positive emotions usually have inherent inertia. If the trader chooses to buy based on certain market indicators, then the relevant indicators will increase, and then stimulate more traders to buy according to their trend, forming a cycle.
At present, there are not many institutional investors entering the cryptocurrency market. The role of Bitcoin may increase the confidence of traditional investors in the whole industry. Improving their reputation can make it easier for institutional investors to make entry decisions. . In general, large traditional funds do not pay special attention to one token and another.