Bitcoin Is Gradually Losing Dominance – Is This Good For The Cryptocurrency Industry?

Although prices recently rose to be aligned with the altcoins’ rally, even cracking the $45,000 threshold and now flirting with the $50,000 level, the question remains alive about the current status of the Bitcoin dominance index (BTCD).

Since the start of the year, the benchmark initiated a decline that just had a significant stop around the lows of May, near 40.00. After that, however, BTCD looked at a fresh recovery, but it was limited to preventing further falls and hitting levels near 50.00. Still, the index remains stuck within a range on a daily chart, hovering between 40.00 and 48.00.

But the fact that BTCD remains at lower levels, and the influx of BTC is not aligned at so-bullish levels seen before despite the bull-run triggered at the end of 2020, doesn’t imply that cryptocurrencies are losing ground in terms of adoption, and let’s dig into the reasons.

Altcoin Rally

First, there is a growing interest among altcoins and even more for the DeFi coins, whose popularity keeps rising despite the ongoing security flows of some of the projects. However, that’s an old story that will get fixed as time passes. Don’t worry.

Before the bearish momentum seen over the last few months ahead of the summer, altcoins like Chainlink, Litecoin, Shiba Inu, Aave, among others, experienced significant flows, according to on-chain data, with some of them hitting yearly and even all-time highs so far this year.

Adoption is Unstoppable Globally

Moreover, a fall in the BTCD index doesn’t imply that Bitcoin is losing interest whatsoever in a mainstream perspective. El Salvador’s Bitcoin adoption, Coinbase going public, traditional banks (especially in the US) looking at crypto exposure for their wealthy customers, etc., are some of the bullet points that take down any suspicions on BTCD decline hurting the cryptocurrency market, and thus the industry itself.

After the Bitcoin dominance plummeted to 40 approx, Stack Funds commented in a report: “We believe the rotational playbook has reversed as dark clouds loom over the markets. We are expecting investors to cycle back into Bitcoin as uncertainties increases as the markets undergo another reset. Hence, a bounce in Bitcoin dominance should occur, further supporting Bitcoin’s price in the short-term.”

Is it Just a Short-lived Correction in the Midst of Fear?

That being said, all points toward a temporary slump in the dominance of the world’s biggest cryptocurrency, which is a standard and cyclical situation in the markets. But, yes, for our information, we also have fear and greed sentiments among the crypto investors like in the traditional financial markets. That’s a fact, and without it, technical analysis won’t exist, and it won’t make any sense.

Also, we shall not be afraid of any regulatory setback in any critical country for the industry. In fact, it would always mean that the governments and the traditional banking system cannot hide their fears about their status quo being questioned by a decentralized economic system.

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