2019-5-25 17:00 |
In the cryptocurrency world, there are numerous interesting statistics which should never be overlooked. The Bitcoin Dominance Index, while not necessarily a market trend indicator, has quite a lot of merit to it. There is no denying Bitcoin will remain the world’s leading cryptocurrency for some time to come, as it is valued significantly higher compared to other markets.
Determining the Strength of Bitcoin’s ValueAs the name somewhat suggests, the Bitcoin Dominance Index depicts how highly valued Bitcoin is compared to all other markets combined. Given that there are thousands of different markets, it is uncanny how Bitcoin is so vastly superior to everything else. Even the second project by current market cap struggles to maintain 1/5th of Bitcoin’s market cap.
While this figure has always been in favor of Bitcoin first and foremost, it has recently reached a new two-year high. Especially in mid-2017 and most of 2018, the BDI dipped well below the 50% threshold. Today it sits comfortably at over 56%, indicating there is only one market that really matters in all of cryptocurrency.
What About the Altcoin Season?Many people expected the altcoins to soar in value following Bitcoin’s recent price surge. While most markets managed to gain a degree of value in the process, it seems no major changes have occurred as of yet. The most notable developments include Ethereum hitting $250, Litecoin surpassing $100, and XRP crawling back to just under $0.40. Very interesting trends, although it is evident they all pale in comparison to Bitcoin’s gains.
Based on the current Bitcoin Dominance Index figures, it seems safe to assume there will not be an altcoin season for the foreseeable future. That doesn’t mean the markets will not see any changes over the next few days and weeks, but the 30% gains will have to wait a little while longer. Some markets are even struggling to note any gains right now despite the overall bullish sentiment, which shows how powerful Bitcoin’s presence really is.
A High BDI is BullishContrary to what some people might expect, there is a key reason why a high Bitcoin Dominance Index is promising. If this figure is well above the 50% market, there is usually a pretty bullish market trend taking place. If this value starts to plummet, it seems people are scraping to chase minor umps and potential profits in the altcoin sector.
Throughout 2019, the BDI has begun rising significantly, which coincides with Bitcoin’s price move from $3,000 to $8,000 in rather quick succession. If this rate of growth is to be sustained, there is a genuine chance the BDI will hit 75% again as it did in 2017 when all markets turned uber bullish in quick succession. Altcoins will benefit from Bitcoin’s momentum regardless, thus a higher BDI is favorable for everyone.
Total Market Cap and Volume Hinges on BitcoinIt cannot be stressed enough how crucial positive Bitcoin price momentum is for the entire cryptocurrency market cap. Just seven months ago, the total crypto market cap sat at $115.8bn. At the same time, the Bitcoin Dominance Index dropped well below 50%. Additionally, the overall trading volume had dropped well below $16bn per day, thus it is not hard to see why all of these factors seem to correlate with one another.
Today, the crypto market cap has risen to $253.57bn again, whereas the daily trading volume sits at $78.71bn. All of this is seemingly a direct correlation to the Bitcoin Dominance Index, as Bitcoin is the gateway to altcoin markets for most traders and speculators. As such, a high BDI is more important than people may think, as there are a lot of other factors which coincide with this statistic.
Disclaimer: This is not trading or investment advice. The above article is for entertainment and education purposes only. Please do your own research before purchasing or investing into any cryptocurrency or digital currency.
Image(s): Shutterstock.com
The post Top 4 Reasons why a Rising Bitcoin Dominance Index is Promising appeared first on NullTX.
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