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Veteran trader and financial analyst Peter Brandt said in a tweet that Bitcoin could crash after its dominance dropped below 41 percent. He suggested that the world’s largest cryptocurrency could decline by as much as 82 percent, as it did from the high of January 2018.
Bitcoin dominance is the measure of Bitcoin’s market capitalization relative to the market cap of the rest of the crypto industry. As of mid-week, Bitcoin accounted for 40 percent of total global cryptocurrencies.
“Last time Bitcoin Dominance was in low 40% range was Jan 2018. $BTC then declined 82% from the Jan 2018 high. Will it happen again? Not a prediction – just pointing it out,” Brandt wrote in a Sept. 7 tweet.
Brandt used a classic technical pattern known as Head and Shoulders to illustrate how Bitcoin could be headed for a crash as it did in 2018.
The price of Bitcoin hit a high of $52,000 this week before crashing on Tuesday to around $42,000. The price has recovered somewhat since then to $45,903.16 as of this writing.
While Bitcoin’s price has risen in value during the last two weeks, its dominance has slipped to lows not seen since June 6. Depending on the crypto market price aggregator leveraged, Bitcoin’s dominance has been between 39.99 percent to 41.52 percent.
Bitcoin was once the unquestioned king of cryptocurrencies, making up more than 90 percent of the crypto market at the start of 2017. Its market share has since declined as more coins have been introduced and gained in value.
Bitcoin still made up about 60 percent of the total crypto market cap in 2020, and was around 70 percent at the start of 2021 as Bitcoin’s value surged. But other coins have risen in value in recent months eating into Bitcoin’s dominance.
Altcoins occasionally outperform Bitcoin for an extended period in what crypto analysts have dubbed an “alt season.”
One of the biggest markets eating into Bitcoin’s cap is Ethereum, which holds a 19.4 percent market dominance according to Coingecko data.
The top 10 markets by market capitalization today include Bitcoin (BTC), Ethereum (ETH), Cardano (ADA), Binance Coin (BNB), Tether (USDT), XRP, Solana (SOL), Dogecoin (DOGE), Polkadot (DOT), and USD Coin (USDC).
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
