Despite substantial price volatility in April, June, and early August, Bitcoin’s value has surged by approximately 51% year-to-date, adding nearly $450 billion to its market capitalization. This notable increase has also significantly affected Bitcoin’s dominance ratio, which has risen well above the levels observed in the previous year.
According to data from Stocklytics.com, Bitcoin’s dominance ratio reached nearly 60% in August, marking the highest level since early 2021.
Previous Peak: February 2021
The dominance ratio, a key metric in the cryptocurrency realm, gauges Bitcoin’s market capitalization relative to the total crypto market cap. It reflects Bitcoin’s strength compared to other cryptocurrencies (altcoins) and indicates trading sentiment, highlighting whether Bitcoin is being overshadowed by stablecoins or NFTs.
Although Bitcoin ended 2023 with an impressive 160% gain—three times its price growth in the preceding eight months—its dominance ratio was still lower compared to this year. Despite increased institutional interest from major financial firms such as BlackRock and Fidelity helping Bitcoin recover from the 2022 bear market, its dominance ratio remained just above 50% for most of last year.
Data from Coingecko and Statista revealed that Bitcoin’s dominance ratio stood at 40% in January 2023, with altcoins dominating the market with a 60% share. This figure saw a modest rise of 5% over the next four months despite Bitcoin’s price surge. By October, Bitcoin’s dominance ratio had climbed to 50% but dropped to 47% by December.
2024: A Stronger Bitcoin
In 2024, Bitcoin’s dominance ratio showed a marked improvement. From January to June, the ratio fluctuated between 48% and 53%, reflecting market reactions to potential changes in central bank interest rates. By early August, the dominance ratio had surged to nearly 60%, a level last seen in February 2021. Although it has since slipped to around 53%, this still represents a 6% increase compared to the same period last year.
Growth in Other Major Cryptos
According to Coingecko data, Bitcoin was not the only major cryptocurrency to see its dominance ratio increase this year. Solana’s dominance ratio more than tripled over the past eight months, rising from 0.78% in January to approximately 3% last week. Binance Coin also experienced a modest increase, with its dominance ratio climbing from 3.1% to 3.5%.
However, while Bitcoin and a few other major cryptos saw growth, most experienced declines. Ethereum’s market share fell from 18.1% to 14.6%, reflecting a shift in market sentiment. Tether’s dominance ratio decreased from 6.5% to 5.2%, and XRP’s share dropped from 2.7% to 1.4%. Dogecoin also saw a reduction in its dominance ratio, falling from 0.88% to 0.7% over the past eight months.
