Bitcoin Market Dominance: From 66% to 33% and Up Again

In the bull market from September to December 2017, Bitcoin occupied a 66 percent share of the total cryptocurrency market cap at its max.

During that same period, Bitcoin generally occupied over 50 percent of the market cap for cryptocurrencies and reached its maximum market share of 66 percent on Dec. 7, 2018.

As the bull market progressed and the price of Bitcoin increased, Bitcoin's share of the cryptocurrency market cap decreased.

Bitcoin declined past the 50 percent market share threshold on Dec. 19 - reaching a level of 48.26 percent - and from that point until mid-January, it was all downhill for BTC. Bitcoin's market dominance continued to decline and its market share eventually hit an all-time low of 32.45 percent on Jan. 13, 2018.

When Bitcoin occupied 32.45 percent of the cryptocurrency market cap, Ethereum occupied 18.54 percent of the market, Bitcoin Cash 6.15 percent and Ripple 10.42 percent - a significant increase from the percentage of the market share these coins held when Bitcoin dominated over 60 percent of the market.

"Retail investors wanted to find the 'next coin,' given what we saw in 2017. More investors [were] interested in ICOs and in the altcoin market, major down trend since December. Recently, investors are going back into the major coins; investors are saying it's safer to stay in the top five coins by market cap."We did research where we looked at the performance of [the] top five [coins] on a quarterly basis with a $100,000 investment distributed by market cap, quarterly gains are up to 68 percent.

"Some people might have lost faith or don't see any improvement the market anytime soon, so we see [a] 'flight to quality.' There might be another situation where people don't want to lock up the losses - especially if they entered the market in December-February - and get out of the market, but instead are trying to play a safer bet and experience less volatility. It's also the case that after such corrections, some coins never rebound. So it makes sense to wait for a better time holding your investments in Bitcoin."

So is the bear market over? Maybe Bitcoin gaining a larger market share will lead to a reversal in the ongoing bear market and push us into a bull market.

Or maybe the cryptocurrency market is resembling one of its earlier states before thousands of altcoins existed and Bitcoin was really the only viable investment option - as was the case from 2014-2017 when Bitcoin occupied over 80 percent of the market share on average.

"When Bitcoin is in the bullish trend again, we expect the dominance will continue to decline because of the arrival of new coins with support from financial groups and - as already mentioned - reallocation of savings from Bitcoin back to existing projects. This process is natural. You can see that back in 2016, Bitcoin's dominance was around 85-90 percent and basically the total market was represented by Bitcoin. But then the boom happened and lots of new projects appeared on the market, and they attracted attention from investors. Money started to flow from Bitcoin to altcoins, causing a decline in Bitcoin's dominance."