Does Bitcoin Really Help the Altcoin Market?

Does Bitcoin Really Help the Altcoin Market?

2022-02-02 | Selina Mathew

Does Bitcoin Really Help the Altcoin Market?

Bitcoin (BTC) is regaining market share from altcoins after reaching its biggest market cap domination as of November 2021 last week. According to CoinMarketCap as well as TradingView data, BTC temporarily stood for more than 42 percent of the total cryptocurrency market value in late January.

Bitcoin regains market capitalization dominance.

After falling from all-time highs in November, the current swings have enabled Bitcoin to regain much of its squandered territory versus altcoins. Formerly, the spotlight was on large tokens like Ether (ETH), Solana (SOL), and others that took advantage of Bitcoin's vulnerability. With the tides clearly turning, power appears to be returning to BTC, which tried to maintain 40 percent dominance during the second half of the previous month. Market capitalization is very far from a precise indicator of market strength since it puts existing tokens as opposed to those with a limited history as well as does not account for the effort done or value underlying a certain cryptocurrency's market capitalization. Analysts prefer the realized cap, which values each unexpended transaction output (UTXO) depending on the price where the coins implicated in the transaction were last traded. Although conventional market cap, the realized cap has stayed relatively stable since the all-time highs in November, now standing at $453 billion, according to data from on-chain analytics firm Messari.

Ethereum fees have currently surpassed those of Bitcoin.

In terms of realized capitalization, the indicator for Ethereum has undergone a more dramatic decline since the fourth quarter of the previous year. With the ETH 2.0 project embroiled in turmoil and charging record-high fees, doubts about its capacity to compete with Bitcoin persist. According to data from the on-chain analytics business Glassnode, the value being moved on the Ethereum blockchain per $1 in fees against BTC is decreasing. According to other estimates, Bitcoin costs currently account for just 1% of ETH transaction fees.

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