Bitcoin Market Cap Dominance Hits Highest in 22 Months... "Altcoin Regulations Are a Boon"

Impact of SEC's Securities Claims on Altcoin Price Drop
"Dominance Increase and Price Rise Are Separate Issues"

The 'Bitcoin Dominance,' which represents the proportion of Bitcoin in the total market capitalization of virtual assets, has reached its highest level in about 22 months. This is attributed to the recent sharp decline in the prices of these virtual assets following the U.S. Securities and Exchange Commission's (SEC) claim that a total of 19 altcoins have securities characteristics.

Image source=Reuters·Yonhap News

According to CoinMarketCap, a global virtual asset market status relay site, as of 7 a.m. on the 16th, Bitcoin Dominance was recorded at 47.83%. This is the highest figure since the end of July 2021. Bitcoin Dominance had fallen to around 37% in September last year but has been on an upward trend since then. This month, it rose about 3 percentage points within 10 days after recording 44.83% on the 6th.

Earlier, on the 5th and 6th, the SEC filed lawsuits against global virtual asset exchanges Binance and Coinbase, judging that 19 coins listed on these exchanges have securities characteristics. The coins claimed by the SEC to have securities characteristics include Binance Coin and BUSD issued by Binance, as well as Solana, Polygon, Cardano, Filecoin, The Sandbox, Axie Infinity, Algorand, Decentraland, COTI, Cosmos, Chiliz, Flow, Dfinity, Near Protocol, Dash, Voyager, and Nexo.

Binance Coin, ranked 4th in total market capitalization, saw its share in market capitalization decrease from 4.21% to 3.53% as of this day following the SEC's lawsuit. Solana also dropped from 0.72% to 0.59% during the same period, and the share of coins ranked outside the top 10 in total market capitalization decreased from 14.30% to 12.85%.

The increase in Bitcoin Dominance is because the price decline of altcoins was greater than that of Bitcoin following the SEC's securities claim. Looking at the price decline over the past week, Bitcoin fell by 3.95%, while Binance Coin dropped 9.59%, Solana 21.62%, Algorand 9.40%, Chiliz 23.53%, and Dash 24.28%. The price decline occurred due to concerns that if the SEC regulates these virtual assets as securities, stricter regulations than currently applied would be enforced.

As Bitcoin's dominance rises, claims have also been made that its price will surge sharply in the future. Michael Saylor, founder of MicroStrategy, predicted that the virtual asset market will be reformed around Bitcoin. He said, "The SEC's regulations will be a positive factor for Bitcoin investors," adding, "Bitcoin's market share in the virtual asset market will more than double."

He continued, "Bitcoin's share increased from 40% to 48% this year," and argued, "If the SEC continues to target other tokens, Bitcoin's market share could surge up to 80%." He also added, "It is a logical progression that Bitcoin's price could increase 10 times, or even 100 times, from its current level." MicroStrategy is known as a representative company holding a large amount of Bitcoin alongside Tesla.

Professor Hong Ki-hoon of the Department of Business Administration at Hongik University said, "I agree with the claim that Bitcoin Dominance will rise because altcoins are facing a crisis due to SEC regulations," but explained, "Bitcoin itself was not created for capital raising, so it is somewhat exempt from securities issues, but virtual assets including Ethereum have securities issues." He added, "However, an increase in Bitcoin Dominance and a rise in price are different matters," and said, "Bitcoin's price may temporarily rise due to the decline in other coins' prices, but fundamentally, Bitcoin also belongs to the virtual asset market and cannot be free from the negative impact on altcoins."