According to Coinmarketcap, the bitcoin dominance in the cryptocurrency market is currently about 68%, but Arcane Research analysts believe that in reality it reaches 90%.
The researchers emphasized that the services, when assessing the dominance of the first cryptocurrency, do not take into account liquidity in the market and a decrease in the price of an asset when mass selling tokens.
“For example, you can sell 1 token for $ 3, but what happens if you put up for sale a million of these tokens right away? If liquidity is not taken into account, then market capitalization becomes an absolutely useless measure, ”the report says.
Researchers calculated trading volumes of various cryptocurrencies as an indicator of liquidity and it turned out that bitcoin occupies up to 90% of the market. At the same time, stablecoins were excluded from the study, since, according to analysts, they do not compete with other crypto assets.
Thus, alternative currencies are even less likely to take the place of bitcoin than we thought. Moreover, the effect of the crowd means even more in the financial world, where “liquidity is everything!”
“Every day, when Bitcoin dominates the market, other cryptocurrencies lose their chances of competition. This must be understood and accepted both by projects creating their own infrastructure and by investors. The value of bitcoin makes its blockchain even more reliable and forces users to carefully monitor passwords and keys, ”said Bendik Norheim Schei, an analyst with Arcane Research.
In early July, cryptocurrency trader and TV presenter Max Keiser expressed confidence that the altcoin season would not come and that the dominance of bitcoin in the market would continue to grow.