Altcoins climb, Bitcoin dominance drops to lowest level since September

Bitcoin is at its lowest level of market dominance since September 2020.

This follows the latest BTC record record, which climbed to over $ 40,000.

As the enthusiasm around Bitcoin cools, Ethereum, DeFi, and altcoins are likely heating up.

The atmosphere began to change with the introduction of larger-scale Bitcoin institutional investors. The fundamentals that govern the cryptocurrency market, however, remain the same.

Following the historic rise in the price of Bitcoin , which doubled its old record of 2017, BTC’s dominance has started to crumble. This parameter corresponds to the percentage of the entire crypto ecosystem represented by the BTC.

The higher the level of dominance of BTC, the greater the market share of Bitcoin compared to that of all other cryptocurrencies combined, and vice versa. As Bitcoin continues to cool and Ethereum and decentralized finance (DeFi) heat up, BTC recorded its lowest level of market dominance since September 2020.

The altcoins begin a share of the domination of Bitcoin

Bitcoin recently peaked at nearly 70% market dominance. It has since fallen below 62.5%. Looking at CoinMarketCap’s chart of Bitcoin’s Percent Dominance, we can see opposite reactions with bitcoin and Ethereum price dominance.

When Bitcoin’s dominance fell, Ethereum’s total dominance in the market increased by around 11%, reaching over 16.5%. As the hype around Bitcoin subsides and the price begins to stagnate, more investors are turning to Ethereum.

Decentralized finance could help uptake

As a whole host of new investors enter the cryptocurrency space for the first time, many are now discovering the possibilities Ethereum can offer. Compared to the traditional financial system, ETH offers unique solutions.

The year 2020 was marked by the explosion of decentralized finance, or DeFi, with less than $ 1 billion in total value blocked (TVL). This figure now exceeds 25 billion dollars. The introduction of new decentralized exchanges, lending and borrowing platforms, insurance coverage platforms, etc. breathed new life into Ethereum.

These solutions show the world what the smart contract platform is capable of. Even with relatively slow transaction speeds and high transaction costs, the DeFi industry has consolidated itself as a value-added and competitive market.

Countless new platforms have sprung up on Ethereum, with some processing billions of dollars in transactions every day. Developers regularly launch new projects.

Many DeFi platforms are also seeing their own cryptocurrencies reach record prices. The dominance of BTC is gradually crumbling, which partly explains the drop in percentage.

As users become more familiar with Ethereum , the dominance of the bitcoin market may continue to weaken.

Ethereum can repeat Bitcoin’s trajectory and reach $20,000, according to Metcalfe’s Law

The law explains how a system is sustained by the number of individuals in the system itself.

Analysts have studied the price correlation of Bitcoin and Ethereum and suggest that if the Metcalfe Law is followed, there is a great possibility that cryptomeda will reach $20,000, just as Bitcoin did in 2017.

One of the analysts who argue that Ethereum can repeat the success of Bitcoin and reach $20,000 is Raoul Pal, who used social networks to explain the Metcalfe Law.

For the analyst, the Metcalfe Law is manifesting itself in a really acceptable way between Ethereum and Bitcoin.

According to him, after examining the data related to the day Bitcoin reached 1 million addresses for the first time and applying them to Ethereum, he realized that there are chances of the blockchain platform reaching the same price record.

Metcalfe’s Law states that the effect of a network is proportional to the square of the number of connected users. In other words, the more users there are in the network, the more it will grow on its own.

The analyst published his analysis on twitter pointing out the great similarities between the price of Immediate Bitcoin and the price of Ethereum.

„No, it can’t be… the prices and price structure are identical in log terms too??? WTF? But BTC is the one truth…this cant be!“

Metcalfe and Ethereum Law

Another one who also believes in the Metcalfe Law and thinks that the price of Ethereum can reach 20 thousand dollars is DH Taylor from Seeking Alpha. He published a report where he highlights the size of the network, number of connections and price trajectory.

Taylor understands that the Law can be applied to the market of cryptomaps in general, although it was originally applied to telecommunications and the growth of social networks, such as Facebook.

„The more people integrate cryptomaps into their lives, the more cryptomaps are accepted and growth continues to push the price up,“ Taylor said.

The law is used as a way to explain how a system is sustained by the number of individuals in the system itself.

By looking at the size of the Ethereum network, looking at the number of connections and the price path, Metcalfe’s Law can be seen more than once.

Ethereum can be dethroned by other platforms

The price of Ethereum has already appreciated about 60% in 2021, in fact, part of this growth is due to the continuous development of decentralized finances (DeFI).

Of course there is no certainty that the price of Ethereum will continue to rise and will reach $20,000.

Alternative blockchain protocols, such as Polkadot, have also increased in value in recent days and may dethrone Ethereum, depending, of course, on the adoption and preference of the market itself.

Better to keep an eye on the number of users in the network.