[Bitcoin Now] Shrinking Market Cap Share... Price Also Declining

[Image source=Yonhap News]

[Asia Economy Reporter Lee Jung-yoon] The Bitcoin dominance, which represents the proportion of Bitcoin in the total cryptocurrency market capitalization, has decreased by more than 6 percentage points compared to last year.

According to asset analysis site TradingView, as of 1:40 PM on the 1st, Bitcoin dominance recorded 42.75%, down 0.02 percentage points from the previous day. This is 6.56 percentage points lower than the same time last year.

Bitcoin dominance decreases when altcoins are more attractive investments than Bitcoin. Currently, the price of Bitcoin has fallen more than 30% compared to last year. When Bitcoin prices are weak, if altcoins decline less or even rise, Bitcoin dominance falls. Also, even if Bitcoin prices rise, if altcoins increase more, Bitcoin dominance decreases.

In the early days of the cryptocurrency market, Bitcoin dominance reached 100%, but it began to decline as altcoins emerged. Additionally, the advent of NFTs (Non-Fungible Tokens) and the metaverse also contribute to the weakening of Bitcoin dominance.

Meanwhile, according to the global cryptocurrency market tracking site CoinMarketCap, as of 1:42 PM on the same day, Bitcoin price was $37,966 (approximately 47.95 million KRW), down 1.68% from the previous day.

Historically, Bitcoin prices tended to increase in May. However, with the announcement of the Federal Reserve's aggressive interest rate hike, known as the big step (50 basis points increase), prices have shown weakness. Furthermore, concerns over economic slowdown due to China's COVID-19 lockdowns and the U.S. stock market closing lower on the 29th of last month (local time) also had an impact. The Nasdaq index, focused on tech stocks, fell 536.89 points (4.17%) to 12,334.64. The Dow Jones Industrial Average dropped 939.18 points (2.77%) to 32,977.21, and the large-cap S&P 500 index closed at 4,131.93, down 155.57 points (3.63%).

Domestically, Dunamu, which operates the cryptocurrency exchange Upbit, reported its Digital Asset Fear & Greed Index at 45.29 on the day, indicating a 'neutral' stage. Compared to 44.60 (neutral) the previous day, it rose by 0.7 but fell 1.72 from 47.02 (neutral) a week ago on the 24th of last month. Dunamu's Digital Asset Fear & Greed Index is divided into stages: 'Extreme Fear (0?20)', 'Fear (20?40)', 'Neutral (40?60)', 'Greed (60?80)', and 'Extreme Greed (80?100)'. The greed direction indicates increased buying interest among market participants, whereas the fear direction reflects a fear of asset decline, leading to market exits and a chain reaction of price drops.