BTC Dominance, Does it Matter?

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Coinmonks

5 min readSep 22, 2021

In September 2016, the Bitcoin dominance of the market stood at 80%. By September 2021, a mere five years later, the dominance had dropped to a mere 42% (give or take a few fractions). Why does this matter and why at the end of the day it is actually not important?

BTC Dominance is the BTC market cap as a percentage of the overall crypto market cap. At the current time of writing, the overall market cap of the crypto industry is $2tn with Bitcoin contributing $840bn. Back in 2016, it was a $12bn total market cap. The crypto industry has moved on rapidly in five years.

BTC dominance has dropped by almost 50% in 5 years.

Let’s take a look at what, other than the size of the market has contributed to this decline and why it should be celebrated.

Innovation and Market Creation

Back in 2016, the majority of cryptocurrencies were purely speculative. Rather than delivering services, they were barely proof of concepts, ICOs and some large investments. Litecoin and Monero, what have you been doing…?

The stats below show just how many projects have launched between 2016 and 2021 (Stastica 2021):

2016–644
2017–1335
2018–1658
2019–2817
2020–4400
2021–5800

Projects have multiplied nine-fold in the 5 years and with it came innovation, DeFi, Layer 2 technologies, real-world solutions. Crypto has moved from speculation to full-on deployment, although the rollout has only just begun.

Adoption

Bitcoin wallets in 2016? A little under 10m compared to 77m as of today. it is difficult to quantify, but one could argue the number of crypto holders may have skyrocketed from 10m to 100m+ over this time. Household names such as Paypal, Revolut, Tesla have all brought the terms “cryptocurrency” and “Bitcoin” into the mainstream media. One coin we will not cover is Dogecoin, nope, not going to happen.

Alongside these household names, other companies such as Grayscale Trust (which was in its infancy in 2016), Microstrategy (and the Bitcoin champion Michael Saylor) and Digital Asset Group have been buying into Bitcoin and other assets such as Solana (SOL), Ethereum (ETH) and Cardano (ADA).

Easy of Access

In 2016, you had ability to buy Bitcoin from exchanges, Coinbase and a collection of rather shady brokers who would trade Bitcoin for Amazon vouchers and other unsavoury methods.

Today, you can open one of a multitude of Apps such as Robinhood, Revolut, Paypal, FTX and buy a wide range of cryptocurrencies. “FOMO”, or Fear Of Missing Out has led to newer projects being bought on a whim in seconds. This simply wasn’t available five years ago.

So, Dominance Doesn’t Matter?

In a word, no. Simply put, adoption, ease of access and the massive increase in the industry as a whole has led to just more competition. It would not be foolish to suggest that by 2026 the market could go from $2tn to $20tn of which Bitcoin could reach $4tn. This would see a 500% increase in the value of Bitcoin but the dominance would drop from 42% today to 20% by 2026.

Bitcoin is seen more and more as a store of value. Michael Saylor refers to it as “Digital Real Estate” with which you can outperform traditional currencies such as USD, GBP and the EUR which lose value over time.

Bitcoin could become a safe haven during Stock Market volatility, macro economic issues or global conflict. At present, it is too small and is hit harder as it is seen as speculative.

What Could Overtake Bitcoin in Market Cap?

Of the existing cryptocurrencies, they are three stand-out projects which have the potential to reach a larger market cap than Bitcoin.

Ethereum
The upgrade to Ethereum 2.0 in 2022/2023 will bring with it a reduction in network fees and introduce a deflationary system which in time will increase it’s value. It has the most developers, most Dapps, NFTs. It is the number two crypto and is my favorite to catch Bitcoin.

Cardano
Charles has a plan and it is to go global. He is a co-Founder of Ethereum after all. The Alonzo upgrade brought with it Smart Contracts (by name at least) which will now allow it to compete with Ethereum for projects. I personally don’t think Cardano can overtake Bitcoin, it’s goal should be to play catch up on Ethereum.

XRP/Ripple
This might seem to be a strange pick but the outsider is XRP. The fight with the SEC has been a massive drain on resources and has suppressed the price of XRP. Without this, where would XRP be? $3? $5? Who knows but this would give it a market cap of $130bn, 2.5x behind Ethereum, and 6x behind Bitcoin. If they walk away from the SEC with a favorable result and replace the global liquidity and banking system with their own, they could become the number one cryptocurrency in the world.

Will Bitcoin Be Replaced As The De Facto Store of Value?

Bitcoin will always be the first and best.

Whether you consider Bitcoin to be digital gold or digital real estate, it is the most secure, powerful network the world has ever seen.

There really isn’t a challenger to the Grandfather of Cryptocurrency. Bitcoin may lose it’s position as the number one by market cap but it will always remain the coin that started the revolution.

And Finally…

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