Hey @cryptovestor, this might be something you might want to add to your toolbelt: https://www.turtlebc.com/tools/buy_percentage?period=3years
It gives a good idea of Supply vs Demand when it comes to BTC. Would like to have your take on it.
When it comes to bitcoin dominance, I personally don't know what to think of it. To me, it hasn't been a good tool to tell me where I should invest or what kind of cycle we are getting into. What I see is a trend downward over time.
Why I think overtime people are moving into altcoins is because some investors in the space are getting more and more in touch with what certain coins provides in terms of additional benefits....would it be SteemPower, Staking NEO or owning masternodes.
For me, as an investor, staking in SteemPower is ridiculously profitable since I'm literally printing money with my votes(author+curation rewards)...why would I trade that with something like bitcoin at this point? I don't have much incentives to do so other than diversification...but I can buy stocks or more stable assets if I want real diversification.
To add to this view (of BTC dominance declining as a trend), coins like Ether and Gas can be seen as an investment in a commodity that has more value in the future.
Also, some people hold alts through bear markets. Period. Where before people would almost certainly dump most of their alt power into btc in the case of 'uncertainty', now only some of the space does that.
I am also unsure what to make of BTC dominance. @cryptovestor have you ever made a video solely on the advantages of using BTC dominance as a metric? Curious to learn more about it
Before Bitcoin all altcoins were just considered to be shitcoins, which i would have agreed as most were just clones of Bitcoins code and had no use case.
Looking at the history of coinmarketcap in 2015 July 26 there were a lot of useless altcoins and many of them didn't survive to today. Ethereum was considered to be another useless shitcoin and it did have a lot of problems at launch, but now it has major usability for creating ERC20 tokens, which coinmarket cap is filled with (Ethereum was created in 2015 July 30, so the coinmarketcap link is about the day Ethereum launched).
Now if you go to coinmarketcap you can see coins that are actually real, with different use cases (or they try to be). It isn't just 5 coins like before, but probably a few hundred of them which secured partnerships and are aiming to provide for users a new way of payment/utility/securities. Businesses see that there is big potential with blockchain and they want to be part of this new technology.
In 2017 December the altcoin bullrun happened because people found out that there were basically cryptocurrency penny stocks, which meant high risk, but very high reward and started pouring their Bitcoin profits onto ICOs and altcoins. That is why when Bitcoin went down, all altcoins suffered the same fate and were overall very risky. Today altcoins seem to be more resistant, with introduction of upcoming FIAT pairing and numerous other feats. The small cap projects are growing and big players with $$$ are noticing this. Altcoins will start being noticeable to the public and prices will obviously increase, while Bitcoin may fade away because of its old technology and inability to update.
In the end the word altcoins will slowly phase out, because there won't be a huge gap between big boys like Bitcoin, Ethereum, Litecoin compared to NEO, Vechain, IOTA since like before, Ethereum being a shitcoin in 2015, now can't be considered an altcoin. The word "altcoin" may as well be defined as - "not bitcoin".
TL;DR: Just like Ethereum was considered useless at launch, so are most small cap coins, but after a while adoption will rise and more legitimate coins will fill the crypto landscape.
The only problem with your analysis is the scale of bitcoin adoption/ brand and history of security.
Ethereum has a lot of adoption, just look at how many ICOs are launched on ERC20 tokens and how many people use Ethereum for games and other activities. Bitcoin is definitely big, but Ethereum isn't far behind.
Yes security is a problem. The Ethereum team is trying to solve issues about that and i look forward to that. Improvements on Ethereum is a lot faster compared to Bitcoin.
The ALT coin projects are maturing and now launching their projects. They are not just ideas anymore. I am loving NEO, and kicking myself for not buying ZenCash at $15! Oh what two weeks ago? You only need 42 to stake.
42 for a masternode I believe
I dont actually think bitcoin dominance means anything significant at all apart from an indication that either there are more altcoins in the market, or some altcoins are increasing/decreasing in value. To look at it at an even bigger picture, what the hell is the market cap for a currency anyway? what is the "market cap" of the Japanese yen. I'm intrigued by your by percentage tool, so (pardon my ignorance) it shows the percentage of trades thats actually a buy? correct?