Measuring Long-Term Dominance
The bitcoin dominance index is a popular indicator that is used by analysts to measure the dominance of bitcoin over the cryptocurrency market, relative to other cryptocurrencies. Since the beginning of January, the dominance index of bitcoin has decreased from over 90 percent to 50 percent, due the emergence and rapid growth rate of alternative cryptocurrencies like Ethereum, Bitcoin Cash, Litecoin, and Monero.
However, Woo believes the decline in the bitcoin dominance index is a healthy long-term trend for the cryptocurrency market, as it will strengthen and mature the tokenized economy created by newly developed cryptocurrencies.
Long term #bitcoin dominance on a decline, IMO this is healthy – describes the long journey of crypto assets maturing as more of the world is tokenised.
— Willy Woo (@woonomic) November 24, 2017
Several analysts in the cryptocurrency space such as WhalePanda have criticized the misinterpretation of the bitcoin dominance index. In a column, WhalePanda emphasized that bitcoin cannot be compared to other crypto-tokes or assets in the space. Although some may resemble the former, they are fundamentally different to bitcoin and do not often operate as currencies…