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While the largest cryptocurrency Bitcoin (BTC) continues to show price movements that indicate consolidation, mainly moving sideways, the downward turn of altcoins has surprised investors. Many investors are asking “why are altcoins falling” in light of this situation, while experts point out that the answer lies in Bitcoin Dominance (BTC.D).
Altcoins Fall as Bitcoin Dominance Rises
Current data shows that Bitcoin has seen a 0.75% decrease over the last 24 hours, trading at $43,755, yet many altcoins have been observed to fall by rates reaching and even exceeding 5%. The largest smart contract platform Ethereum (ETH) is trading at $2,237 after a 1.07% decrease over the last 24 hours as this article is being prepared.
Looking at the list of the top 10 altcoins by market value, it’s noticeable that many other altcoins are also trending downwards. Accordingly, Binance’s BNB has fallen by 4.68% to $305.54, Solana’s SOL has dropped by 7.14% to $95.23, Ripple’s XRP has decreased by 1.77% to $0.5668, Cardano’s ADA has fallen by 6.05% to $0.5224, Avalanche’s AVAX has dropped by 7.83% to $34.66, and Dogecoin’s DOGE has decreased by 3.47% to $0.08063 in the last 24 hours.
Experts suggest that the current declines in the altcoin market, especially among the largest altcoins, can be attributed to Bitcoin Dominance. They believe that the largest cryptocurrency will potentially gather energy to rise for a while, and during this process, it will suppress altcoins, causing them to fall.
According to data provided by Tradingview, Bitcoin Dominance (BTC.D) has risen by 0.5% in the last 24 hours to 53.44% at the time this article was written. A closer look at the BTC.D chart shows that it had dropped to 50.94% on December 28, 2023, and has been rising steadily since then.
Experts consider the rise in BTC.D to be causing a pullback in altcoins, but they also believe this pullback presents both a buying opportunity for altcoins and paves the way for a stronger rebound.
What is Bitcoin Dominance (BTC.D)?
Bitcoin Dominance (BTC.D) represents the ratio of Bitcoin’s total market value in the cryptocurrency market. This ratio measures Bitcoin’s dominance over the entire cryptocurrency market. The BTC.D ratio is typically expressed as a percentage.
The BTC.D ratio shows the proportion of Bitcoin’s market value in the total cryptocurrency market compared to the total market value of all cryptocurrencies. For example, if the BTC.D ratio is 60%, it means that 60% of the total cryptocurrency market value is attributed to Bitcoin.
The BTC.D ratio is used to understand general trends in the cryptocurrency market. For instance, an increase in the BTC.D ratio could indicate a decrease in demand for altcoins or an increased interest in Bitcoin. Conversely, a decrease in the BTC.D ratio could suggest an increase in demand for altcoins or a growing interest in them.
This ratio is used by cryptocurrency investors and analysts as a tool to assess market trends, but it does not provide a complete picture and should be considered alongside other factors.
