Charts: How Bitcoin – s Market Dominance is Being Challenged

Charts: How Bitcoin - s Market Dominance is Being Challenged

Given its status spil the original blockchain protocol, it should be no verrassing that bitcoin has long predominated the digital currency markets.

Ter terms of market capitalization, it dwarfs other cryptocurrencies. Its first-mover status and widespread adoption has (so far) given bitcoin the dual advantage of network effect and steep barriers to entry, keeping alternatives at bay.

But there’s evidence that this longstanding narrative could be switching.

Latest infighting te bitcoin’s development community has provided a zonderling chance for alternatives to stress their value propositions and even assert fresh ones (like being a hedge te times where bitcoin’s future seems uncertain).

This has led to an interesting, observable trend. While the total pie of the cryptocurrency market keeps growing larger, bitcoin’s slice is becoming smaller.

1. Bitcoin’s dominance decline

The clearest illustration of bitcoin’s network effect is the ratio of bitcoin’s market compared to the market cap of all other digital currencies.

The most authoritative source for this gegevens is CoinMarketCap.com, which publishes its ‘Bitcoin Dominance Index’. Its current value of 72% illustrates that bitcoin has its lowest percentage of market share since it commenced publishing statistics ter April 2013.

This analysis is by no means concrete, spil bitcoin’s share has dipped ter times of stress before. The question now, however, is what make of the downtrend.

Spil the chart above shows, bitcoin has seen a number of acute periods of decline followed by reversions to the mean. But the gegevens illustrates that the market may be trending against ‘bitcoin maximalism’, or the idea bitcoin will be the only vooraanstaande blockchain ter the future.

Two. ‘Seeking Alpha’

Yet, it may not be fair to suggest that bitcoin’s declining market share represents competition against its value proposition.

The digital currency space is inherently risky, but bitcoin it is still the most liquid and well-known player ter the space. Spil the chart above shows, however, alternative cryptocurrency markets are now providing better comebacks for investors (at least te the brief term)

For an investor, bitcoin’s ROI is being overshadowed by upstart cryptos who valuations are enhancing at rocket tempo. The question for traders might now be, ‘Why risk capital te the bitcoin market, when other assets are much more rewarding to hold?’

Three. Value propositions

Yet, a major difference inbetween previous declines and now is the relative strength of other alternative protocols.

None may be more notable than ethereum, and its blockchain asset, ether, which has bot setting fresh all-time highs te latest trading sessions. This surge followed the news ter late February of a 30-firm partnership called the Enterprise Ethereum Alliance, and almost two years of open-source development.

Unlike many other protocols, ethereum has a clearer value proposition ter that it is designed not to be a digital currency, but a podium for decentralized applications based on blockchain.

With a market cap nearing $4bn, the ethereum is gaining a more liquid market that is better better suited for trading, and institutional firms are beginning to notice.

Also notable is the rise of dash. However analysts have cautioned that they are skeptical about the asset’s increase ter value, it has nonetheless gained 200% te less than a month, cementing itself spil a solid number three te the list of digital currencies by market value.

It is unclear whether this latest bull run is a speculative price bubble or a revaluation based on strong fundamentals, but it could signal the market’s favorable view of a strong governance protocol and a payment protocol which features anonymous transactions.

Four. Up to the right

Tho’ the possibility exists of a future not predominated by bitcoin, this shouldn’t be taken spil a negative connotation.

Due to the fact that fresh bitcoins are produced daily, the total value of all bitcoin’s has never bot higher. While certainly some coins have bot lost, burned or otherwise liquidated from the market, this means that more money has never bot invested te bitcoin.

But if one thing is for certain, the uncertainty te the market is having an effect, and creating opportunities for switch.

The leader ter blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a rigorous set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests ter cryptocurrencies and blockchain startups.

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