Bitcoin dominance, which measures the cryptocurrency’s market capitalization relative to the total crypto market, dropped to 39.4% Tuesday, the lowest since May 2018.
The number has fallen as the crypto environment becomes “more competitive,” with investors pouring more money into other blockchains, nonfungible tokens and decentralized finance, analysts said.
Bitcoin
BTCUSD,
+0.08%
started off 2022 underperforming smaller tokens, as the largest cryptocurrency posted a 0.7% loss year-to-date, while all the crypto market cap-weighted indexes are in positive territory, according to a Tuesday report by crypto analysis firm Arcane Research.
“In the past three years, especially since the peak of 2017 bull market and Q1 of 2018, altcoins and other projects that aren’t bitcoin have grown in legitimacy.” Adrian Kolody, co-founder of Domination Finance, a platform that tracks bitcoin dominance, said in an interview.
Michal Cymbalisty, co-founder of Domination Finance, said that “with bitcoin above $40,000, the return is just not appealing as they were when bitcoin was like $10,000 or $15,000.
“If you’re already coming into crypto, naturally you have a higher risk appetite. So you want high ROI (return on investment),” Cymbalisty said. “Most of the fundamental development is happening outside of bitcoin.”
Bitcoin has consolidated in a range between $45,000 and $52,000 for the past month. The cryptocurrency’s “choppy sideways pattern looks set to continue although support is coming under pressure,” Nicholas Cawley, strategist at forex analysis site DailyFX wrote in an email.
A confirmed break of support would “open the way to a cluster of prior lows just above $40k, while a break of resistance opens the way back to just under $53k,” wrote Cawley.
Ethereum
ETHUSD,
+2.28%
was trading near $3,805, up 1.9% over the past 24 hours and up 2.1% year-to-date.
Among smaller coins, Cosmos’s ATOM
ATOMUSD,
+13.84%
token rose 55% over the past seven days. Fantom is trading 32.8% higher from seven sessions ago. Meme coin Dogecoin
DOGEUSD,
-0.41%
traded 5.4% lower during the past seven sessions. Another dog-themed token, Shiba Inu
SHIBUSD,
-0.55,
declined roughly 5% for the past seven days.
