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Bitcoin Dominance Drops Under 40% For The First Time Since January

ETH Miner Balances At All-Time Highs Ahead Of The Merge

Bitcoin Dominance Drops Under 40% For The First Time Since January

Bitcoin dominance (BTC.D), which is the market capitalization of BTC relative to that of all digital assets, has fallen below 40% for just the second time since 2018 and stands at an eight-month low, according to data from CoinMarketCap.

The move stands in contrast to the last crypto bear market which kicked off in 2018 and saw BTC.D rise throughout the carnage to above 70% in September 2019 as alternative crypto assets collapsed in price. 

Bitcoin Dominance. Source: CoinMarketCap

The Rise of Ether

Perhaps predictably, Ether has emerged as a primary force driving BTC.D close to all-time lows. ETH dominance (ETH.D) stands at 20% as of Aug. 30 after crawling upwards from a low of below 8% during the last quarter of 2019. 

ETH Dominance. Source: TradingView

ETH.D hasn’t collapsed with the bear market — instead, it’s held its approximate level of 20% since November 2021, which marked the peak for crypto as a whole when the market cap for all digital assets just pushed past $3T. 

BTC.D has been roughly stable since May 2021.

The ETH/BTC ratio, which is the price of ETH against the price of BTC, largely mimics the ETH.D chart. The two largest cryptocurrencies account for 60% of the market — ETH’s relationship to BTC largely dictates how dominant it is in the overall crypto market.

ETH/BTC Ratio. Source: TradingView

ETH has dropped 59% in the last year, according to The Defiant Terminal. Despite that, it has held its level of roughly 20% dominance, as all major digital assets have lost comparable amounts of value in that time frame.

ETH Price
Volume

ETH Price, Source: The Defiant Terminal

Funding At 14-Month Lows

Funding rates for ETH have also hit a 14-month low, according to an Aug. 28 report from a crypto trader who goes by Maartunn

When funding rates on perpetual futures of an asset are negative, that indicates a surplus of sellers, and traders get paid to go long. As Maartunn noted, the last time funding rates were this low on ETH in July 2021, the asset rallied shortly thereafter in a short squeeze.

Miner balances, the amount of ETH that miners hold, have also more than doubled from 114,255 to 261,849 in the last year, according to data from OKLink. This could indicate miners are bullish ahead of the Merge as they choose to hold their ETH block rewards rather than sell the tokens.

With the first phase of the much-anticipated Ethereum upgrade just a week away, anticipation seems to be driving ETH’s price action as traders have also placed bullish bets through derivatives

Previous Cycle

Bitcoin dominance has remained below 50% for 15 months now, a first for the crypto asset. 

The all-time low of 36.83% for BTC.D came on Jan. 8, 2018, at a time when other digital assets, sometimes referred to as “altcoins,” had rocketed upwards.

And they certainly did. From Dec. 8, 2017, to Jan. 8, 2018, ETH soared 145.8% to $1,185 from $482. Then-third-largest digital asset Ripple (XRP), which aims to be used as a currency for financial institutions, nearly pushed a decimal place to the left, surging to $2.14 from $0.24.  

January 2017 marked the top of the last crypto bull market. Afterwards, BTC.D worked its way back up to over 70% in August 2019 as the world’s largest cryptocurrency bled, but altcoins were decimated.

Now, the crypto market is bleeding again, having shed over two-thirds of its value since its November 2021 top. But this time, BTC.D has hovered around 40%, potentially signalling a less-dominant era for what is for now the world’s largest cryptocurrency.

Crypto Market Cap over the past 5 years. Source: CoinGecko

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