Bitcoin dominance hits all-time low as merger approaches

The mythical fusion is almost here. Ethereum’s transition from Proof-Of-Work to Proof-Of-Stake is the most talked about event in crypto at the moment, and the money is flowing to that blockchain. That in turn translated into a decline in bitcoin dominance. This metric measures the percentage of the entire crypto market that bitcoin represents, and it is currently “down to levels not seen since 2018.” Something that makes sense. Because the merger is almost here and everyone is betting.

In accordance Arcane Research’s The Weekly Update, “the all-time low occurred during the ICO craze in January 2018.” Which makes sense, because ICOs were the talk of the town at the moment. However, that drive eventually faded. Can we expect the same out of the merger? On the one hand, this is a structural change on Ethereum as a whole, so it’s more important than ICOs have ever been. On the other hand, the stakes are higher and there are no guarantees that the merger will go as planned.

The merger is not the only factor

Before we go any further, let’s explore Arcane Research’s stats:

“September has started with varying returns among our indices. Bitcoin has started the month worst and is down 1%. All other indices are in positive territory, with Large Caps gaining 1%, Small Caps 2% and Mid Caps 7%.

So everyone and their mothers have been gaining ground on bitcoin in recent weeks. Mid Caps in particular, with Ethereum Classic as an unlikely leader. This almost forgotten cryptocurrency is also gaining ground due to the merger. When Ethereum goes from Proof-Of-Work to Proof-Of-Stake, an entire industry will disappear. The new system does not require miners, so all of them are exploring their opportunities, and the original Ethereum seems to be the big winner in this scenario.

However, there is another classic cryptocurrency that grew even more. Back to the weekly update:

“While the performance of majors has been largely flat over the past seven days, we are seeing massive increases in some of the smaller coins. Terra Luna Classic is up 222% due to plans to revive the chain, while Ethereum Classic is up 20 %.

So while that’s a big factor, it’s not all about the merger. Arcane Research offers one more important factor:

“A significant caveat to bitcoin’s near-all-time low dominance is that stablecoins are far more significant now than the last time bitcoin showed this low dominance. Excluding USDT and USDC from the equation, we see that bitcoin still makes up half of the crypto market. “

Market Cap BTC Dominance on CryptoCap | Source: TradingView.com

Bitcoin dominance over the past few months

We at NewsBTC constantly monitor bitcoin dominance so you don’t have to. The field is more volatile than you might think. Two months ago, our report highlighted the following:

“In the last couple of days, bitcoin has seen its market dominance fall by more than 2%. This market share was quickly absorbed by Ethereum, which has seen its dominance increase during this time period. It added more than 2% to go from to be at around 16% to its current dominance of 18.9%.

But last month the report’s title was “Bitcoin dominance grows as crypto risk appetite remains low.” The reason for this was:

“Arcane Research noted that the overall weakness in the sector is driven by a “natural rotation as traders seek safety in a falling market”. The rise in Bitcoin dominance has been accompanied by an increase in stablecoins’ overall market share.

So the bitcoin dominance calculation is a rollercoaster, and the looming merger generates additional volatility. Currently, according to Arcane Research, ETH is at 20.35%, and BTC is at 38.26%.

Before we go, there is one last factor to analyze. On September 13, the US will release its CPI for August. The estimate is that the interest rate will increase by 75 bps, but the reality is that anything can happen. And the announcement will come in tandem with the merger. Fun times ahead.

Featured Image by Chris Sabor on Unsplash  | Charts by TradingView