Bitcoin’s dominance of crypto market at 90%

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Forbes has published an article reporting that bitcoin’s market dominance is hovering around 70% after climbing this year, according to CoinMarketForbes has published an article reporting that bitcoin’s market dominance is hovering around 70% after climbing this year, according to CoinMarketCap and most traditional measures — a level not seen since April 2017.

Cointelegraph reports that it may be actually as high as 90%, according to analysts at Arcane Research. It has argued that to get a more accurate measure of Bitcoin’s dominance, liquidity should be factored into the equation: “One might be able to sell one token for 3 dollars, but what happens if you want to sell 1 million? Without accounting for liquidity, market capitalization becomes a meaningless measure.”

The researchers used trading volume as an indicator of liquidity, although they allowed that a more sophisticated measure could be constructed for more granular results, and then they re-calculated the volume-weighted market capitalisation of the cryptocurrency market. Their findings point to a new figure of above 90% for Bitcoin — over 20% higher than other estimates.

The researchers conducted two parallel analyses — one based on data from CoinMarketCap and one confined to the 10 cryptocurrency exchanges identified by Bitwise Asset Management as having reliable (i.e. not wash traded or manipulated) volume, Cointelegraph says. It must also be noted that Arcane Analysis excluded stablecoins from the equation, arguing that such asset-pegged currencies do not compete with cryptocurrencies that have a self-sustained intrinsic value.

The researchers believe that this level of dominance makes it “less and less likely that other cryptocurrencies can compete with Bitcoin as a money.” Furthermore, such a robust dominance has implications not only for investors, but also for those developing payments infrastructure. However, the analysts did add one caveat: “It is notoriously difficult to compare and contrast different projects targeting different niches. […] For crypto, one could argue that the whole idea of measuring the relative strength of different coins and tokens falsely implies a competition between complementary solutions.”

Cap and most traditional measures — a level not seen since April 2017.

Cointelegraph reports that it may be actually as high as 90%, according to analysts at Arcane Research. It has argued that to get a more accurate measure of Bitcoin’s dominance, liquidity should be factored into the equation: “One might be able to sell one token for 3 dollars, but what happens if you want to sell 1 million? Without accounting for liquidity, market capitalization becomes a meaningless measure.”

The researchers used trading volume as an indicator of liquidity, although they allowed that a more sophisticated measure could be constructed for more granular results, and then they re-calculated the volume-weighted market capitalisation of the cryptocurrency market. Their findings point to a new figure of above 90% for Bitcoin — over 20% higher than other estimates.

The researchers conducted two parallel analyses — one based on data from CoinMarketCap and one confined to the 10 cryptocurrency exchanges identified by Bitwise Asset Management as having reliable (i.e. not wash traded or manipulated) volume, Cointelegraph says. It must also be noted that Arcane Analysis excluded stablecoins from the equation, arguing that such asset-pegged currencies do not compete with cryptocurrencies that have a self-sustained intrinsic value.

The researchers believe that this level of dominance makes it “less and less likely that other cryptocurrencies can compete with Bitcoin as a money.” Furthermore, such a robust dominance has implications not only for investors, but also for those developing payments infrastructure. However, the analysts did add one caveat: “It is notoriously difficult to compare and contrast different projects targeting different niches. […] For crypto, one could argue that the whole idea of measuring the relative strength of different coins and tokens falsely implies a competition between complementary solutions.”

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