Bitcoin is the world’s most renowned digital currency. However, there are now a number of other cryptocurrencies following in its wake, which has led to a substantial drop in market dominance to below 56%. This decline looks set to continue as other digital currencies such as XRP, Ethereum and Binance Coin continue to post strong gains - all having seen a big jump in the past week.
Since it was first founded, the Bitcoin price has risen to unimaginable heights and has dominated the crypto market. However, according to sources, Bitcoin’s dominance now stands at just 55.9%, which is the lowest it has been since May 2019. To date, however, the overall market cap of digital money now stands at $1.95 trillion, which is higher than it has ever reached before.
The Growth of Ethereum, XRP and Binance Coin
One big factor in the decline of Bitcoin is the rise of Ethereum, which is considered the second-largest cryptocurrency behind Bitcoin. In just seven days, it grew nearly 20%. It hit an all-time high on 3rd April 2021at $2,140 per Ether. Now, the currency has a market dominance of around 12.3% and the market cap is steady at around $240 billion.
Meanwhile, there is XRP, which is rising just as steadily as Bitcoin is declining. Although Bitcoin currently stands at just over 55%, in a previous market cycle, it saw its dominance drop down to just 35% and it is possible that this may well happen again. With Ethereum, XRP and Binance Coin gaining substantially in the past week, this will have a negative knock-on effect on Bitcoin.
A Sharp Decline
Back in January 2018, during the last Bull season, Bitcoin saw its dominance drop to an all-time low of 32.8%. However, this turned around and in January 2021, it reached new heights of 70%. Unfortunately, since then, the decline has been sharp and steady. As other cryptocurrencies continue to post strong gains in the past three months, Bitcoin has been a victim of this success. Additionally, investors’ growing interest in NFTs (Non-fungible Tokens) and the DeFi boom has also had an effect.
On 14 March 2021, Bitcoin was valued at an all-time high of $61,200 per BTC and reported its best Q1 performance since 2013 after it gained nearly 100% in the first three months of 2021. However, now it is trading at $59,000 per BTC. JP Morgan recently confirmed its Bitcoin target of $130,000.
An Ever-Changing Market
Anyone who knows anything about cryptocurrencies will know that it is filled with ups and downs. One minute the cryptocurrency is surging up in value, and then the pendulum swings and it is on the decline. Bitcoin may still continue to drop, and there is even the chance that it may well reach the lows of 2018 again. However, just as it did then, it is sure to swing back again and start its growth phase. Bitcoin has much more competition than ever before and when one competitor grows, it is unavoidable that another will drop.