Bitcoin (CRYPTO: BTC) is the most popular cryptocurrency in the world, with its name almost synonymous with crypto itself. But over the years, the crypto world has grown in size, and there are more digital currencies available. Let’s look at just how popular Bitcoin is right now, and whether or not it has become less prominent over the past year.
Coin dominance is an effective way to gauge popularity
A key metric in crypto is how dominant a coin is compared to the entire crypto market. The calculation is simple: Take a cryptocurrency’s market cap and divide it by the total market cap of all crypto.
Bitcoin, for example, has a market cap of around $760 billion. According to CoinMarketCap, the total crypto market has a value of $1.5 trillion, which would put Bitcoin’s dominance percentage at approximately 50.7%.
This means it makes up a little more than half of the entire crypto market’s total valuation. Ethereum, the next largest coin, has a market cap of $265 billion, putting its dominance percentage at 17.7%. No other cryptocurrency even comes close to a 10% dominance score today.
How Bitcoin’s dominance has changed over the past year
The dominance percentage can and will change often, depending on not just the price of Bitcoin itself but other cryptocurrencies as well. Here’s a breakdown of Bitcoin’s dominance percentage at the start of each month, going back to January 2023:
|
Month |
BTC Dominance % |
|
January 2023 |
38% |
|
February 2023 |
41% |
|
March 2023 |
40% |
|
April 2023 |
45% |
|
May 2023 |
45% |
|
June 2023 |
44% |
|
July 2023 |
48% |
|
August 2023 |
47% |
|
September 2023 |
46% |
|
October 2023 |
46% |
|
November 2023 |
51% |
|
December 2023 |
50% |
|
January 2024 |
48% |
Data source: coingecko.com.
What’s interesting to note is that Bitcoin’s popularity actually increased over the course of the past year. A big part of that is likely due to the growing anticipation of the approval of several spot Bitcoin exchange-traded funds (ETFs), which finally took place earlier this month. Investors were expecting an uptick in Bitcoin’s price due to the approvals, which may have also led to more people buying Bitcoin, hoping to cash in on the rising price.
Can this upward trend continue?
Thanks to the approval of more ETFs, Bitcoin may be seen as the most easily accessible cryptocurrency due to the wide range of investing options that are now available. For new investors, it’s the most well-known digital currency, and given its large size, it may also be seen as the safest option to choose from.
Given the high risk in crypto as a whole, new investors may be looking for ways to reduce their risk by going with a big name such as Bitcoin. This safety-seeking approach could lead to a further increase in its dominance percentage.
Another likely positive catalyst is the next Bitcoin halving, a regularly scheduled event that should take place in April 2024. Halving cuts the rewards for mining bitcoins to ensure that supply is controlled. In the past, halving events have been followed by an increase in the price of Bitcoin, for solid reasons of basic economy.
Mining will be less profitable if rewards go down and coin prices don’t rise. This blockchain network can’t process transactions without mining activity. Hence, the halving events are important moments for Bitcoin’s economic model and can influence market dynamics.
Does Bitcoin’s high dominance percentage make it the best cryptocurrency to buy right now?
Bitcoin’s dominance percentage doesn’t make the cryptocurrency a good buy on its own. It’s simply a metric that can help investors understand market sentiment and see if Bitcoin is gaining or losing popularity. Furthermore, unexpected factors may come into play and change the trajectory of Bitcoin’s dominance trend. But based on the current data, it’s evident that Bitcoin remains incredibly popular in the crypto world.
If you are considering investing in crypto, Bitcoin may be your best option. Generally, when there is bullishness in the crypto markets, it’s Bitcoin that is leading the charge. As the largest and most noteworthy digital currency, that’s likely to be a pattern for the foreseeable future.
While new digital currencies will be smaller and could offer greater returns, there is the potential for even more volatility and risk as well. Bitcoin’s strong continued dominance is a great way to gauge the strength of its brand in the crypto world. For new investors looking to gain exposure to crypto in their portfolios, Bitcoin may be the best way to do that.
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David Jagielski has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
Is Bitcoin Becoming Less Popular Compared to Other Cryptocurrencies? was originally published by The Motley Fool