Key takeaways
- The Bitcoin Dominance Index, which measures bitcoin’s share of the overall crypto market, reached 61.39%, a level not seen since March 2021.
- Ether, considered by some to be the leading alternative to Bitcoin, has also lost almost all of the gains made against Bitcoin since Election Day in the United States.
- Bitcoin’s growing dominance in the market may be due to institutional attention to the crypto asset, Trump’s plan for a strategic Bitcoin stockpile, and technical developments.
- Dogecoin is a notable exception in Bitcoin’s rise relative to the rest of the crypto market.
The price of Bitcoin has been on a sharp rise since election night, hitting a new all-time high of over $93,000 on Wednesday before falling back below $90,000.
While alternative crypto assets also tend to move in the same direction as that dictated by bitcoin, altcoins have not been able to keep up with the world’s largest and most popular cryptocurrency so far in this bull run. In fact, the Bitcoin Dominance Index (BDI) hit a new high of 61.39% on Wednesday, according to TradingView. This is the highest level observed since March 2021.
The BDI measures the total value of the Bitcoin network as a percentage of the value of all crypto assets in the world. This is a rather crude way of measuring things, and there are different specific metrics that include or exclude specific types of crypto assets. For example, it wouldn’t make much sense to include stablecoins, which are pegged to the US dollar, in this type of data.
For some, the ETH/BTC trading pair is another option to illustrate Bitcoin’s dominance (or lack thereof), as some view Ethereum as the primary alternative to Bitcoin. That said, even though spot exchange-traded funds (ETFs) have performed better than ever in terms of inflows over the past week, ether has already reversed almost all of the gains it made by relationship to bitcoin after election day in the United States.
Dogecoin bucking the trend
So why is this happening? In the past, Bitcoin led the way in the crypto market before alternatives joined the party and eventually outperformed the oldest crypto asset. There may be different dynamics at play currently due to various technical developments around Bitcoin, such as layer two networks and ordinals. Layer two networks can enable many features found on alternative crypto networks, such as Ethereum and Solana, in addition to Bitcoin.
Additionally, much of the current institutional interest in the market is centered on spot bitcoin ETFs and bitcoin’s role as “digital gold”, with one of Donald Trump’s election promises being the creation of a “strategic stock of bitcoins”. Additionally, BlackRock called bitcoin “a unique diversification tool.”
For now, Dogecoin is a notable alternative cryptocurrency, bucking the current trend, up 145% against bitcoin over the past month. This outperformance is believed to be due to Elon Musk’s close association with Trump’s victorious campaign, as Musk has been the main supporter of the meme-driven cryptocurrency in the past.
