This Key Market Measure Shows Bitcoin Is Dominating the Cryptocurrency Market

Neil Dennis

Every day bitcoin appears to be getting stronger. Maybe this hasn't been reflected in the price for a while as it languishes 30% below its 2019 peak, but against its rivals it is vastly outperforming.

Bitcoin is now the only asset in the top 10 of cryptocurrencies by market capitalization not to have fallen below its 200-day moving average, according to data from Barchart.com.

The 200-day moving average is an important indicator of long-term market trends. As long as an asset remains above this line - which is calculated daily - it is generally considered to be in an upward trend, even if it has been moving lower for several weeks.

Most of the top 10 had already passed the mark some days, even weeks, ago. Bitcoin cash was last of the top to move below on Thursday, leaving bitcoin - below the $10,000 mark, the last one above its 200-day moving average, which currently stands at around $6,420.

Bitcoin Dominance

These moves further illustrate how dominant bitcoin is becoming in the cryptocurrency market. Comparing bitcoin's market capitalization to that of the total of all other cryptocurrencies, it holds nearly 70% of the total market share.

Bitcoin puts a further stranglehold on the market when those cryptocurrencies that are rarely traded are taken out of the equation. This gives a measure of bitcoin's liquidity-driven market dominance, and is closer to 90% of all market share, according to recent research by Arcane Crypto.

In a report on its Kryptografen blog Arcane Research's Bendik Norheim Schei said that given this dominance bitcoin was best positioned to become the currency of the internet, despite other cryptocurrency networks that claim to be quicker or better supported by merchants. Schei said: 

Every day bitcoin stays ahead, it becomes less likely that any other cryptocurrency can compete as a money. That is important to understand not only for investors and those building out payment infrastructure, but also those building out solutions leveraging the security of a public blockchain.

Importance of Dominance

It's not necessarily important that bitcoin may be seen as the currency of the internet - but that it is now being seen as a store of value is important. This puts it in the league of such "flight-to-safety" asset as gold.

And when its rivals fall, crypto enthusiasts who want to stay in the digital asset market will favor bitcoin's haven status. If it can continue to display these attributes, it will attract further institutional interest and gain further dominance in a market with a great many players.

What the rest of this market is looking forward to is bitcoin's own fall below its 200-day moving average. Even bitcoin has fallen below nearer-term measures. Its 50-day moving average is $10,740 and the 20-day is $10,670 at the time of publishing.

It is not necessarily a bad sign. Indeed, crossing the 200-day moving average line can often be an indicator to technical investors that bearish sentiment is being flushed out and that a turnaround may be on the way.