Bitcoin’s share of the digital currency market hit a two-and-a-half-month high on June 25. This means that investors will most likely invest their money in Bitcoin, which has the largest number of trades in the industry.
According to data from Coin MarketCap, the share of Bitcoin increased from 42.5% (its lowest level) to 74.42% (the highest level since April 14).
The Dominance Index is an index that shows the percentage of total market investment offered by Vanguard Digital Currency (now Bitcoin). So when we talk about the rate of bitcoin dominance, we mean that the demand for bitcoin is higher than any other digital currency.
Bitcoin is currently the most common way to convert Fiat money into digital currency.
For example, the bitcoin dominance rate increased from 38% to 66.5% in the last six months until December 2017. It was in December 2017 that the price of this digital currency reached $ 20,000. However, in periods when investors abandon high-risk currencies, they invest in bitcoin and then possibly convert it to cash (fiat) (risk aversion period), the bitcoin dominance rate usually continues to rise.
We are probably seeing a second scenario in the current situation. In the last seven weeks, Bitcoin has fallen from $ 9,990 to $ 5,755, while its dominance rate has risen from 78.35% to 75.42% instead of decreasing.
So it is no surprise that many investors now prefer cash to digital currencies and even bitcoin.
However, if digital currency prices keep pace with bitcoin dominance, it may mean that the digital currency market is declining and will reach a certain floor price after a few months of decline.