Bitcoin’s market share catapults back to almost 50 percent, returning to levels not seen since the December 2017 bull-run that resulted in an all-time high BTC value of nearly $20,000. The return of Bitcoin’s market share dominance coincides with an unsurpassed level of hashing power directed at the Bitcoin network, with total hashpower exceeding 50 quintillion hashes per second.
Data via CoinMarketCap demonstrates that the “Bitcoin Dominance Index,” or the total percentage of market capitalization held by Bitcoin, currently sits at 47.4 percent–a figure not seen since December 20, 2017. The recent increase in Bitcoin’s market share has accelerated due to a number of positive factors on the market, notably the hype surrounding the upcoming SEC decision on the future of Bitcoin ETFs.
Why Does Bitcoin Dominance Matter?
Bitcoin values have recently taken a hit with bearish sentiment, causing BTC to plummet from more than $8,000 to nearly $7,000 in the last week of July 2018. Despite the sudden drop in prices, Bitcoin market dominance continues to increase, rising nearly 10 percent since the beginning of July.
Bitcoin dominance is a key indicator and used extensively in the cryptocurrency market as a defacto crypto/fiat bridge into altcoins and other cryptos via trading platforms and brokerages.
The entrance of significant amounts of fiat capital into the cryptocurrency market typically corresponds to a surge in the Bitcoin Dominance Index—during the six-month run-up to the December 2017 all-time high of $20,000 BTC, for example, the Bitcoin Dominance Rate increased from 38 percent to 66.5 percent.
Crypto Miners Cash in on Bitcoin
The recent downward pressure on Bitcoin price appears to have had little to no effect on the amount of computational power directed at the Bitcoin network, with hashing power recently reaching an all-time high of 50 EH/s, almost four times the 2017 peak of 13 EH/s.
The dramatic surge in Bitcoin hashpower represents a significant amount of capital invested in the Bitcoin network–the increase in Bitcoin hashpower over the last year is roughly equivalent to 2.3 million SHA-256 units, far larger than estimates of the total amount of hardware units in circulation.
While a recent drop in Bitcoin values may have discouraged buyers from directly purchasing Bitcoin, the current block reward of 12.5 BTC—or a little under $90,000 USD—could function as an incentive to bullish miners that see the current market paradigm as an opportunity to accumulate more BTC, anticipating a late 2018 bull run that would see block rewards return to almost $250,000.
Cover Photo by Gez Xavier Mansfield on Unsplash