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The mythical amalgamation is almost here. Ethereum’s transition from Proof-Of-Work to Proof-Of-Stake is currently the most talked about event in crypto, and money is flowing into that blockchain. That, in turn, translated into a decline in bitcoin dominance. That statistic measures the percentage of the entire crypto market that bitcoin represents, and it is currently “down to a level not seen since 2018”. Which makes sense. Because the merger is almost there and everyone has placed their bet.
According to The weekly update from Arcane Research“The low point occurred during the ICO craze in January 2018.” Logical, because ICOs were the talk of the town at that time. However, that urge eventually faded. Can we expect the same from the merger? On the one hand, this is a structural change on Ethereum as a whole, so it’s more important than ICOs ever were. On the other hand, the stakes are higher and there are no guarantees that the merger will go as planned.
The merger is not the only factor
Before we go any further, let’s take a look at Arcane Research’s stats:
“September started with mixed returns across our indices. Bitcoin has started the month worst and is down 1%. All other indices are in positive territory, with the Large Caps gaining 1%, the Small Caps 2% and the Mid Caps 7%.”
So everyone and their moms have been gaining ground on bitcoin over the past few weeks. Especially the Mid Caps, with Ethereum Classic as an unlikely leader. This almost forgotten cryptocurrency is also gaining ground through the merger. When Ethereum changes from Proof-Of-Work to Proof-Of-Stake, an entire industry will disappear. The new system does not require miners so they are all exploring their options and the original Ethereum seems to be the big winner in this scenario.
However, there is another classic cryptocurrency that grew even more. Back to the weekly update:
“While the performance of the large caps has been largely flat over the past seven days, we are seeing huge gains in some of the smaller currencies. Terra Luna Classic was up 222% amid plans to revive the chain, while Ethereum Classic was up 20%.”
So, even though it’s a big factor, it’s not just about the merger. Arcane Research offers another important factor:
“A key caveat to bitcoin dominance that is close to an all-time low is that stablecoins are much more important now than the last time bitcoin showed this low dominance. If we exclude the USDT and USDC from the equation, we see that bitcoin still makes up half of the crypto market.”
Market Cap BTC Dominance on CryptoCap | Source: TradingView.com
Bitcoin dominance in recent months
We at NewsBTC are constantly monitoring bitcoin dominance so you don’t have to. The field is more volatile than you might think. Two months ago, our report emphasizes the following:
“In recent days, bitcoin has seen its market dominance decline by more than 2%. This market share was quickly sucked up by Ethereum, which has seen its dominance increase during this period. It added more than 2% to go from around $16% to its current dominance of 18.9%.”
Last month, however, the report’s title was “Bitcoin Dominance Grows as Cryptocurrency Appetite Stays Low.” The reason for this was:
Arcane Research noted that the overall weakness in the sector is caused by a “natural rotation as traders seek safety in a declining market.” The increase in Bitcoin dominance has been accompanied by an increase in stablecoin’s overall market share.
So the bitcoin dominance metric is a rollercoaster and the impending merger is generating additional volatility. Currently, according to Arcane Research, ETH is at 20.35% and BTC at 38.26%.
Before we go, there is one last factor to analyze. On September 13, the US will release its August CPI. Interest rates are estimated to rise by 75 basis points, but the reality is anything can happen. And the announcement will accompany the merger. Fun times ahead.
Featured Image by Chris Sabor on Unsplash | Charts by TradingView