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For the first time since March of this year, the bitcoin dominance index has surpassed 61 percent, further solidifying bitcoin’s position as the leading digital currency within the global cryptocurrency market.
From January to September, the dominance index of bitcoin has declined from around 90 percent to 30 percent. But, in the past few months, the dominance index of bitcoin has gradually increased and earlier this week, bitcoin dominance index surpassed the 60 percent mark at last.
Reallocation of Funds From Alternative Cryptocurrencies (Altcoins) to Bitcoin
The dominance index of bitcoin has surged since September, as an increasing number of investors and traders started to reallocate their holdings in altcoins to bitcoin. More to that, the announcements of two of the world’s largest options exchanges CME and CBOE to launch bitcoin futures exchanges by the end of 2017 have increased the demand for bitcoin from the traditional financial industry.
At the time of reporting, LedgerX remains as the only Commodity Futures Trading Commission (CFTC)-regulated Swap Execution Facility (SEF) and Derivatives Clearing Organization (DCO) approved to deal with bitcoin and other cryptocurrencies. In the first week of its launch, a period in which the LedgerX team expected to clear minimal volumes to test its systems, LedgerX settled more than $1 million in bitcoin derivatives and options trades.
Based on the success of LedgerX and the rapidly growing demand for bitcoin from the traditional financial industry, CME and CBOE have begun to focus on the development, deployment, and approval of large-scale bitcoin options exchanges.
In August, Ed Tilly, CBOE Holdings Chairman and CEO, stated:
“CBOE is not only a home to options, derivatives and the VIX but also ETF innovations and foreign exchange. This makes us the natural choice for the development and trading of bitcoin futures. We very much look forward to responding to the growing interest in cryptocurrencies through the creation of bitcoin futures traded on a regulated derivatives exchange, with the many expected benefits that this brings, including transparency, price discovery, deep liquidity and centralized clearing.”
It is important to acknowledge the entrance of institutional and retail traders into the bitcoin market because over the past month, that has helped bitcoin regain its dominance over the cryptocurrency market and evolve into a robust, widely recognized, and accepted store of value.
Can Bitcoin Dominance Index Reach 90 Percent Again?
Bitcoin has established itself as a store of value and a safe haven asset since early 2016. It is unlikely that bitcoin could gain 90 percent in dominance index again in the upcoming months, given the exponential growth rate of Ethereum and Bitcoin Cash, two cryptocurrencies with different philosophies and purposes in contrast to bitcoin.
But, bitcoin remains as one of the very few public blockchains and stores of value within the global cryptocurrency market that is being used by active users, traders, investors, and businesses. If the demand for bitcoin continues to increase in the mid-term, the dominance index of bitcoin will likely achieve 70 percent.
Featured image from Shutterstock.