The ratio of Bitcoin’s market dominance compared to all other digital currencies has generally getting smaller since early 2017. This period can be considered the ‘big bang’ for cryptocurrencies, when they literally all exploded onto the scene and inflated into the virtual universe. Over the past week however Bitcoin’s dominance has picked up and its transaction fees have fallen.
Over the first half of 2017 Bitcoin’s market share plummeted from almost 90% to around 37%. This was largely at the expense of Ethereum which skyrocketed in price from around $10 to over $400 during the same period. Other altcoins such as Ripple’s XRP also chomped away at the Bitcoin behemoth as the crypto train gathered momentum. The latter half of 2017 saw Bitcoin steadily rise back up to a high of 64% market dominance in early December as traders soon realized that they needed BTC to buy altcoins.
Big Drop For Bitcoin
As crypto mania reached a crescendo just after New Year Bitcoin found itself in free-fall again dropping by 50% to a low of 34% market dominance. Smaller altcoins such as Verge, Tron, and Cardano were being shilled and pumped causing millions of dollars to flow away from BTC and into them boosting their market capacities into the billions. The party did not last long and those that shot up so rapidly fell the hardest. Everything was sucked into the virtual vortex and the crypto markets shed 66% from $830 billion down to a low of $280 billion in just one month from January 7 to February 6.
In the past week however Bitcoin’s market dominance has seen a turn around and it is reclaiming some of its lost share. It has regained 14% from 34% on Feb 10 to just over 39% today, and it continues to climb as many of the altcoins carry on bleeding. Those that were seeking a quick buck are likely to have sold in a panic as markets fell, while those with true belief in blockchain technology and the projects they have invested in will be hodling for the future.
Chart: Coinmarketcap Usage and Transaction Fees at a Low
While Bitcoin approaches 40% market share again its actual usage has fallen to the lowest point in six months. Costs to send Bitcoin became unfeasible during its peak in December when they were as high as $35. This caused many to switch to more cost efficient alternatives such as Ethereum, Litecoin and even Bitcoin Cash.
With fewer people using Bitcoin its transaction fees have dropped back to an 18 month low yesterday. This means that a standard transaction of six blocks will cost as little as 20 cents with an average fee being around 50 cents according to analytics websites. Bitcoin transaction fees have not been this low since before the crypto boom in March last year.
These low fees only apply for peer-to-peer transactions however as exchanges set their own fees and commissions which are usually higher. Segwit adoption and Lightning Network implementation could help to bring Bitcoin back to the digital currency of choice it was developed to be in the first place.
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