Bitcoin dominance, the ratio of the No. 1 cryptocurrency’s value to the overall market cap of digital assets, fell below 50 percent on April 22 for the first time since 2018, according to the data sites CoinMarketCap and CoinGecko.
The price of one Bitcoin fell below $50,000 on April 23 for the first time since early March, reaching $47,875 before climbing back above $50,000 hours later.
Other digital coins also lost value on Friday, with a wave of selling that helped wipe out more than $200 billion of the value in the cryptocurrency market. Ether fell to $2,320, down 8 percent. XRP, No. 5 cryptocurrency, plunged 16 percent.
The decrease is attributed to a news report that President Joe Biden is expected to double capital gains tax for the wealthiest Americans to 39. 6 percent. Biden promised on the campaign trail to raise taxes for the rich, saying it was unfair that many of the wealthy pay lower tax rates than people who work for them.
Climbing more than sixfold in the last 12 months, Bitcoin has had a great year. In 2021 alone, bitcoin rose 66 percent. But Ether — the digital token of the Ethereum blockchain — has had an even better year, rallying over 200 percent.
“The market is clearly choosing other digital assets over bitcoin,” Coindesk reported.
Offered by CoinMarketCap, the Bitcoin Dominance Index is a metric that traders can use to quickly get a sense of Bitcoin’s value relative to the broader digital currency market. It measures demand for Bitcoin vs. altcoins. Traders also use the index to asses the market’s risk aversion, according to FXCM, a provider of online foreign exchange trading.
Listen to GHOGH with Jamarlin Martin | Episode 74: Jamarlin Martin Jamarlin returns for a new season of the GHOGH podcast to discuss Bitcoin, bubbles, and Biden. He talks about the risk factors for Bitcoin as an investment asset including origin risk, speculative market structure, regulatory, and environment. Are broader financial markets in a massive speculative bubble?
The ratio was 48 percent as of 15:44 coordinated universal time (11:44 a.m. ET) Thursday and came as ether surged to a new all-time high, Coindesk reported.
On social media, Bitcoin enthusiasts told themselves not to panic, examined the graphs looking for patterns in past Bitcoin trajectory, and said things like “when in doubt, zoom out.”
Zac Prince, the CEO at BlockFi wealth management products for crypto investors, tweeted, “Didn’t think we’d be here but I’ll happily take it. Volatility cuts both ways but pays you in the long run with #btc.”
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