Bitcoin Dominance At 70% For the First Time Since 2017

August 9, 2019 / by Crypto.IQ

On Tuesday, the Bitcoin dominance rate hovered close to 70 percent for the first time since the 4th of December 2017.

At approximately $217.91 billion, Bitcoin now contributes up to 69.93 percent of the entire cryptocurrency market capitalization. The world’s leading cryptocurrency hit its lowest level in January 2018, covering just 36.68 percent of the whole market.

The drop in Bitcoin’s market dominance resulted from investors putting their capital in the various assets launched during the ICO mania of 2017. But following the crash of most of those blockchain projects, investors either came back to Bitcoin and other dependable assets (i.e., Litecoin and Ethereum) or bid the cryptocurrency marketplace goodbye. Consequently, Bitcoin’s dominance began to go up in 2018, although its value was going down.

Bitcoin More Appealing to Investors

At the moment, the fundamentals backing the “people’s currency,” Bitcoin, are macroeconomic. Some of the factors prompting investors to invest in Bitcoin include the US-China trade war, the US federal rate cut, economic sanctions on Turkey and Iran, strict capital control in China and hyperinflation in Venezuela and Zimbabwe.

On the other end of the spectrum, mainstream financial companies are launching various services to cater to the needs of their ever-increasing Bitcoin traders. For instance, TD Ameritrade and Fidelity Investments are introducing Bitcoin trading solutions on their platforms. Switzerland’s most popular stockbroker, Swissquote, launched a similar service not long ago. Bakkt, the Intercontinental Exchange-backed digital platform, recently began testing its Bitcoin futures contracts, the first physically-settled ones in the world.

Price Reflecting Macro Conditions

Bitcoin reached its new high of 70 percent market dominance after a strong bias against it in the media. In the last seven days, the assets have increased by over 30 percent – moving from $9371 to $12,320.  This increase comes after President Donald Trump threatened to impose a 10 percent tax on Chinese imports worth $300 billion. As payback, the Central Bank of the People’s Republic of China deliberately devalued its currency to less than 7 dollars a yuan, its lowest since May 2008.

History has shown that there is a close inverse relationship between Bitcoin and the Chinese Yuan. When Bitcoin increased by up to 58 percent earlier in May, the price of yuan fell by 2.5 percent. Financial experts believe Chinese investors, who are under stricter capital controls, considered Bitcoin as a safe-haven asset.

Data recordings show that the values of altcoins against Bitcoin have also dropped in the last 24 hours. For instance, Ethereum is 2.23 percent down against BTC. At the same time, the Ripple/Bitcoin pair is also weak, having dropped by over 5 percent in more than a day.