The Neironix analytics department analyzed the dominance structure of the cryptocurrency market and decided to demonstrate why 95% of altcoins have no chance of survival.
Last week, Bitcoin set a new high of dominance, which reached 71% at the highest point. At the moment, this indicator has slightly decreased, but if you look at the dominance chart, it becomes clear that this is not the limit.
As we can see, the last time such a high value was 2.5 years ago, in the spring of 2017, when a huge number of alternative cryptocurrencies began to appear on the market. In this regard, the dominance of Bitcoin decreased by two times in just three months. In the summer of 2018, after the cryptocurrency boom of altcoins, the graph of bitcoin dominance began to show reversal signs for the growth of the indicator. And since then, the value has continued to grow for a whole year.
Why is the indicator of dominance so important for investors and traders? Dominance is the ratio of the coin capitalization to the total market capitalization. It shows what market share the selected cryptocurrency holds.
Bitcoin, as the very first cryptocurrency, always had the highest dominance and so far has never yielded leadership to other coins and tokens. The lowest rate was recorded in early January 2018, when bitcoin occupied only a third of the market.
At that time, many began to buy altcoins in the hope that they would give the same growth as bitcoin; it killed many. People buying altcoins saw only possible profits, not understanding at all whether the world needed new coins and tokens.
According to statistics, 95% of all altcoins lost more than 90% of their value after the winter period of 2018. The craving for superprofits and the subsequent drop had a negative impact not only on investors but also on all the other people who only recently heard about the blockchain. Many began to think that this was another financial “soap bubble” and interest in the industry faded a year.
As a result, we see that interest in the altcoin market is dying away due to the loss of confidence. Therefore, if we look at infographics, we will see how small a market share altcoins occupy.
Ethereum, which is considered the most popular cryptocurrency, except for bitcoin, has only 7.27% of the market. Although in the recent past this value reached the level of 31%!
A similar situation occurs with XRP: at the moment, only 4.22% instead of 20% in May 2017.
The remaining coins from the top 10 never exceeded 10% dominance, and now their performance has fallen completely. Closes the top-10 Monero, and its domination at the moment is only 0.5%! But this coin is on the 10th line by capitalization.
Now the market has released more than 2500 cryptocurrencies. So, there are significant doubts about the need for their existence and applicability to the world community. Many analysts said that almost all altcoins would die.
Take a look at the dominance of the top 50 and top 100 cryptocurrencies: they are 96% and 98%, respectively. It means that 2400 cryptocurrencies occupy only 2% of the entire market. We are unlikely to make a mistake if we say that half are already dead and the rest are dying in slow agony.
Now on the market, there is a transfusion of capital from altcoins to bitcoin, to preserve their funds. But this does not mean that soon we will not see the opposite picture.
Projects that continue to actively work on their product and promote it to the masses will be able to take their place in the crypto industry and will not die. Already some altcoins have a higher chance of survival due to their developments (for example, Ethereum, Litecoin, Binance Coin and others).
Interest in the altcoin market is built, first of all, on confidence in the need project and its product. At the moment, we see that only about 5% of all cryptocurrencies occupy almost the entire market. It means that they don’t want to trust the other altcoins and the chances of their survival tend to zero.