07 Jun 2022

Flight to safety evident in dominance metrics

Bitcoin and stablecoin dominance tell a story of growing de-risking in the market.
Source: Tradingview (BTC, USDT, USDC, BUSD, ETH), Coingecko
The bitcoin dominance currently sits at 46.13%, on par with the highs seen in October 2021. This is an interesting metric to cover in isolation, as it tells a story of de-risking in the market.On top of a rising BTC dominance, stablecoins might also be assessed as a commonly used investment alternative to de-risk. Thus, it might be valuable to evaluate the BTC dominance alongside the stablecoin dominance in the market.Currently, the combined dominance of BTC, USDT, USDC, and BUSD sits at 59.2%, which is the highest dominance seen by this “flight to safety bundle” since early April 2021. 59.2% is still 5-10% shy of the dominance seen throughout most of 2020. By stretching the dominance metric one step further by including the Ether dominance, we see that the combined dominance of ETH in addition to BTC and stables currently sits at 77.13%, aligning with what we saw throughout most of 2020. In other words, today, the combined contribution of the rest of the altcoin market currently represents 22.87% of the total crypto market cap. In early May, altcoin (excl. ETH) dominance sat at 30%, and their contribution to the rest of the market has thus plunged by 7% in one month. This illustrates the gravity of how obliterated most alts have been in May. Nevertheless, while alts outside of ETH have seen massive declines in May, the dominance metric has its limitations. A lot of the smaller altcoins still have lofty fully diluted valuations.
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