3 Reasons Bitcoin Gets Its Reign Again in the Cryptocurrency Market

3 Reasons Bitcoin Gets Its Reign Again in the Cryptocurrency Market

Bitcoin (BTC) is gaining its lost dominance in the cryptocurrency market, even though it is trading almost 60% below its all -time high.

The biggest Bitcoin takeover in 6 months

The Bitcoin Market Dominance (BTC.D) indicator, a metric that measures the value of the BTC market over the rest of the cryptocurrency market, jumped around 47% on May 27, the highest until October 2021.

The dominance index has risen despite the decline of the Bitcoin market over the past six months, from $ 1.3 trillion in November 2021 to $ 550 billion in May 2022, suggested that traders selling altcoins are more comfortable. .

Let’s take a look at three reasons why traders might exit the altcoin market to seek protection in Bitcoin.

The story of Ethereum “Merger” is getting colder

Native token Ethereum (ETH), the other largest cryptocurrency by market capitalization, has witnessed a decline in market dominance over the past five months – starting by 22.38% in December 2021 to 17.86% in May 2022.

The decline comes after two years of long -term gains, with ETH/BTC rising more than 200% between September 2019 and December 2021.

According to a report by Cointelegraph, Ether has outperformed Bitcoin in recent years, mainly due to the excesses surrounding a long-awaited protocol update, called “Merge,” which it hopes will bring Ethereum will be more scalable and less expensive.

But the update, which aims to move the Ethereum blockchain from proof-of-work to proof-of-stake-similar to the so-called Beacon Chain-has faced repeated delays in its deployment.

Recently, Martin Köppelmann, co-founder of the Ethereum Virtual Machine (EVM) compatible with the Gnosis chain, highlighted seven innovation blocks in the Beacon Chain, which means that the chain is a short “branch” of the process test.

The Ethereum beacon chain underwent a deep update 7 block ~ 2.5 hours ago. This shows that the current node verification strategy needs to be reconsidered to make the chain stronger! (suggestions already available)

– Martin Köppelmann (@koeppelmann) May 25, 2022

Ether was down nearly 13.5% against the U.S. dollar after the May 25 announcement, while ETH/BTC was down 0.059, the lowest in six months.

Ethereum has no plans to raise the price of ETH after the Merger expansion went through, noted independent market analyst OxHamZ, saying investors had already “bought” the network upgrade.

What is the narrative of ETH properties after blending?

Not all KPIs are active

stagnant active portfolios
The NFT hype is dead
LP trading volume with negative trend
Liquidity decreased in the stable
Increased L2 cannibalization (h/t @TaschaLabs)

ETH decreased by 50%, but the value of the barrier space also decreased

– 0xHamZ (@0xHamz) May 25, 2022

MOON at zero

The strength of the Bitcoin cryptocurrency market is also emerging due to the collapse of the Terra market (LUNA).

LUNA/BTC, a financial instrument that monitors the strength of Terra tokens in Bitcoin, fell 99.99% to 0.00000004 in May, making it worthless.

Meanwhile, the LUNA fell similarly against the USD, raising hopes that traders dropped the signal to seek protection against the BTC and the currency.

LUNA’s market capitalization before the fatal crash in May was $ 40.88 billion.

Altszn ded

Overall, the altcoin market, which includes everything from large blockchain projects to cryptocurrencies startups, is down nearly 65% ​​six months after hitting nearly $ 1.7 trillion.

A closer look at some of the indicators shows that – unlike Bitcoin – most have fallen more than 80% to their all -time highs, suggesting investors ’exit from altcoins to of currency, stablecoins or BTC.

This is because Bitcoin is not the oldest blockchain, but stands alone without a central authority.

No one controls the #bitcoin network.

– CZ Binance (@cz_binance) May 26, 2022

Historically, Bitcoin’s dominance in the crypto bull market has waned as a wave of new signals has emerged during the mania process.

For example, the duration of the popular initial public offering (ICO) pump coincided with the BTC.D decline of almost 96% in January 2017 to 35% in January 2018.

Then, the fall in March 2020 was the start of the DeFi and Non -Profit Index (NFT), led by the easing of Federal Reserve measures.

So, if the dominance of the Bitcoin market really hits the rock bottom, it could be reconciled with the macro lows in the price of Bitcoin and could be the beginning of a new phase in the bull market in of the coming month.

The ideas and opinions expressed here are those of the author only and do not necessarily reflect the opinions of Cointelegraph.com. All investment and trading activities involve risks, you should do some personal research when making a decision.

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