Bitcoin Gains 51% Market Share of Crypto Market

Bitcoin, the world’s most popular cryptocurrency, continues to bolster its already dominant position among digital currencies. While over the years its market capitalization has stayed way ahead of the Nos. 2 and 3 cryptos, ethereum and ripple, it has recently become the cryptocurrency with a 51% market share of the total cryptocurrency market.

The figure is computed as a percentage of the market capitalization of bitcoin against the total market cap of more than 1,600 cryptocoins that are in circulation. In simple terms, if the whole cryptocurrency market is represented by a standard market-cap weighted index (like the S&P 500), bitcoin alone would constitute 51% of that index, making it the dominant constituent.

Bitcoin achieved the feat over the weekend, when it surged from $6,146 to above $6,452 on Saturday. During the same period, other altcoins, including the next four market-cap biggies—ethereum, ripple, bitcoin cash and EOS—declined in value, which helped bitcoin gain a controlling market share, relatively speaking, of the overall cryptocurrency market.

How Bitcoin Gained Significant Market Share

The dominant position of bitcoin has evolved over last many months, and was aided by multiple bitcoin-specific developments. Goldman Sachs, which was the first Wall Street bank to announce a bitcoin trading operation, is reportedly also starting crypto custodian services that is expected to bolster bitcoin trading and investments. (See also: Goldman Sachs Is Planning a Crypto Custody Service.)

Last week, bitcoin got a major boost from the NYSE’s parent, Intercontinental Exchange (ICE), when it announced the launch of a new trading platform with bitcoin futures contracts that will be physically settled. Instead of settling the contracts in cash, the physical settlement will require the futures traders to buy or sell bitcoins thereby increasing the trading activity significantly in the bitcoin marketplace. (See also:  NYSE Parent Launches Physical Bitcoin Futures Contract.)

Amid the ongoing financial crisis in Turkey, which has tumbled the Turkish lira to record lows amid high inflation, residents are exchanging their local fiat currency for bitcoin in a bid to safeguard their wealth. Turkish cryptocurrency exchanges have reported more than a 100% increase in bitcoin transactions last week, according to data from Coinmarketcap.com. Earlier, the Canadian exchange TMX has also announced plans to setup a crypto service that will initially focus on bitcoin and ether. (See also: Friday's Turkish Turmoil, Explained.)

Beyond the price fluctuations, bitcoin’s relative rise has also been supported by no significant news of any major updates by other cryptocurrencies. Instead, multiple other cryptos were hit with cases of thefts and hacks raising questions about their security. Japan's Coincheck exchange suffered a loss of $500 million NEM tokens. (See also: Hackers Have Stolen $1.1B in Crypto This Year.)

Bitcoin enjoyed similar 50% plus market share in December 2017 at the time it hit the peak valuation. Despite the issues of scalability, delays in transaction processing and high transaction costs, bitcoin continues to remain the preferred choice for exchange between fiat currency and cryptos. With its robust security aspects capable of preventing the 51% attack, it continues to retain the top spot as the well-established, preferred cryptocurrency for the majority of market participants.