Although the global cryptocurrency market has been volatile in recent times, bitcoin has remained relatively stable, forcing cryptocurrencies like Terra (Luna) to lose all value.
On May 27, the Bitcoin Market Dominance Index, which compares BTC’s market cap to the rest of the cryptocurrency market, hit a new high of nearly 47%, its highest since October 2021. Here are the possible reasons why traders are running away from the altcoin market. Exploring Security in Bitcoin.
ethereum upgrade delay
Ethereum’s native token Ether (ETH), the largest altcoin by market cap, has shown a steady decline in market dominance over the past five months, falling from 22.38 percent in December 2021 to 17.86 percent in May 2022. The decline is after two years of growth. In which ETH/BTC increased by over 200 percent between September 2019 and December 2021.
In recent years, Ether has outperformed Bitcoin due to the enthusiasm of its long-awaited protocol upgrade, dubbed “Merge”, which aims to make Ethereum more scalable and less expensive.
However, the upgrade, which seeks to convert Ethereum’s blockchain from proof-of-work to proof-of-stake (an equivalent of what is known as the Beacon Chain), has been delayed several times.
According to OxhamZ, an independent market analyst, Ethereum lacks the narrative to push the price of ETH upwards after the merge update, as investors have already “priced” the network upgrade hype.
the fall of terra
The collapse of the Terra (LUNA) market seems to have contributed to bitcoin’s new crypto market strength. In May, the value of LUNA/BTC, a financial instrument that measures the strength of the Terra token against bitcoin, fell 99.99 percent to 0.00000004, rendering it virtually worthless.
Meanwhile, LUNA declined against the US Dollar, fueling speculation that traders were selling the coin in favor of BTC and cash.
Altcoins are dead inside
The overall altcoin market, which includes everything from large-cap blockchain projects to questionable crypto assets, has fallen nearly 65% since peaking above $1.7 trillion six months ago.
A closer look at several tokens shows that unlike bitcoin, most are down more than 80% from their all-time highs, indicating that a general investor is moving away from altcoins and towards cash, stablecoins or BTC. .
