If you are one of those traders, there is a nifty tool that can be tracked to spot the time when there will be an opportunity to make money in Bitcoin. According to analysts at JPMorgan, all you need to do is track Bitcoin’s dominance in the whole cryptocurrency space.
“A healthy number there in terms of the share of Bitcoin as a percentage of the total cryptocurrency market-cap at 50 per cent or above. I think that’s another indicator to watch in terms of whether this bear phase is over or not,” said Nikolaos Panigirtzoglou of JPMorgan.in an interview with CNBC.
A bear market refers to the scenario when an asset class falls 20 per cent below its all-time high. Trading anything in bear market can be risky but sometimes rewarding, if you can buy at the right time.
Bitcoin dominance is determined by simply dividing Bitcoin’s market-cap by the total market-cap of all cryptocurrencies. Currently, the indicator shows Bitcoin dominance at 44.7 per cent. In comparison, it was around 60 per cent in April.
Panigirtzoglou said Bitcoin’s relatively low market share was a negative signal that suggests relatively subdued interest in the currency. It should be noted that Bitcoin’s market share has risen in recent weeks.
There are two ways the dominance can reach 50 per cent again: one, if there is a rally in Bitcoin price taking its market share higher; and two, other currencies see a massive sell off, effectively bringing the cryptocurrency market cap down.
Analysts have seen some buying in Bitcoin and demand for Ethereum, its competitor currency, has gone down.Some technical upgrades in the framework may also work for Bitcoin.
“Crypto markets overall have seen significant gains over the last 6-9 months despite the recent dip in prices. But the market is still sustaining very well above the all-time high prices of 2017. This is a good sign of the market still holding a positive sentiment. We are looking forward to the forthcoming upgrades to different blockchain networks and might see more fundamental strength in this space leading to sustainable growth in the future,” said Avinash Shekhar, Co-CEO, ZebPay.
