With Bitcoin Dropping and Altcoins Gaining, Is the Crypto Market Less Dependent on BTC?
While the broader cryptocurrency market has been consolidating heavily recently over the last few weeks, we have seen an interesting trend in the market. Bitcoin (BTC) continues to move sideways as its overall dominance in the crypto space drops under 40%.
On the other hand, some of the altcoins projects have been really showing strength for e.g. Terra (LUNA), Polygon (MATIC), Chainlink (LINK), avalanche (AVAX), etc. This once again brings us to the age-old debate of whether if Bitcoin is losing its grip over the markets to drive the momentum single-handedly.
If we see at the Bitcoin dominance chart below, we can clearly note that it has been on a declining trend since the beginning of 2021. In fact, the Bitcoin market dominance is reaching close to the lows of 2018.
On the other hand, altcoins like Ethereum (ETH) and others have been extending their market dominance. In one of his recent tweets, popular crypto analyst Lark Davis writes:
There are actually a lot of #altcoins showing good strength in spite of #bitcoin looking sad. The more the industry grows the less impact BTC will have on alts.
The Growth of the Altcoin Market
Previously, around 2017-2018, the movement in the altcoin market was heavily dependent on the movement of Bitcoin (BTC). Meaning, Bitcoin had a heavy influence on the altcoin market rally which is now changing!
Over the last few years, we have seen some strong altcoin projects with profound blockchain technology coming to the market. Besides, the fast market expansion of decentralized finance (DeFi), DEXs and NFTs some good projects like Solana, Avalanche, etc. into the limelight.
On the other hand, we have projects like Chainlink (LINK) that solve a crucial problem of data transfers across blockchains. Then we have projects like Terra (LUNA) that address the stablecoin liquidity requirement for DeFi.
Overall, the altcoin space is expanding across key industry solutions which is why the interest in altcoins is growing with time. While many see Bitcoin (BTC) as a store of value, the altcoin projects help in tapping into new technology solutions.