Bitcoin (BTC) Dominates 90% of Adjusted Market Capitalization
As altcoins fail to rally, BTC trading and price dominance are higher than reported.
In 2019, any hopes of an altcoin season were lost, as various coins and tokens keep shedding value. There is only a handful of assets that have outperformed Bitcoin (BTC) this year, and the reported BTC market cap dominance has grown to about 68.8%.
At some points in history, both leading altcoins and a collection of small-scale assets have challenged the market dominance of BTC, which fell to a low of around 32% last December. However, altcoins and tokens are much more illiquid and volatile.
Based on a study by Arcane Research, the adjusted BTC market cap dominance is closer to 90%. The reason for the adjustment is the potentially low volume for newly created altcoins. Despite the creation of multiple new projects, most of them go through significant slippage and price corrections, if traders attempt to sell a larger amount of coins.
Market capitalization is also a static measure, as multiple $1 billion coins only see a small fraction of the assets moved.
To supply a more accurate measure based both on value and liquidity, Arcane Research covered only 10 verified exchanges, with a lower risk of wash trading and faked volumes. But even with adjusted data, Arcane Research warns that analytics are only proxies for understanding digital assets.
“It is notoriously difficult to compare and contrast different projects targeting different niches. Every quantitative measure will at best be a proxy and always brush over important qualitative differences. For crypto, one could argue that the whole idea of measuring the relative strength of different coins and tokens falsely implies a competition between complementary solutions,” commented Arcane Research.
In 2019, talks of an asset that could displace BTC have almost ceased. BTC is currently slightly less influential than stablecoins in terms of trading activity, and in fact defines the dollar-denominated price for multiple altcoins and tokens.
“Every day bitcoin stays ahead, it becomes less likely that any other cryptocurrency can compete as a money. That is important to understand not only for investors and those building out payment infrastructure, but also those building out solutions leveraging the security of a public blockchain,” commented the researchers.
BTC gained additional mainstream acceptance in 2019, as futures trading and physical delivery are set to start this September for US traders. But altcoins and tokens have lost ground, based on analysis that most assets of this type fit the definition for unregistered securities.