Bitcoin dominance has increased today i.e., on 27th May by 46% as Ethereum, the second-largest cryptocurrency, has greatly underperformed and dropped by more than 11% at the same time.
Bitcoin dominance is a measure of how much of the whole crypto market cap is made up of Bitcoin. The most essential aspect of Bitcoin Dominance was that it could help to determine whether altcoins are in a decline or an upswing in relation to Bitcoin. When BTC Dominance rises, altcoins lose value in comparison to Bitcoin. When BTC dominance falls, altcoins gain value in comparison to Bitcoin.
In only one day, the ETH/BTC pair has dropped 7.85%. It has dropped to 0.059 BTC, the weakest since October 20. A trading pair is a function that shows two cryptos that may be exchanged with one another on an exchange, such as ether-bitcoin (ETH/BTC).
Since the beginning of the year, Ethereum has fallen more than 22% versus its biggest opponent, owing to risk-aversion taking centre stage.
While altcoins outperform Bitcoin in bull markets, they often face significantly sharper declines during downturn markets as investors flee to safe and more proven assets.
Cryptocurrencies may continue to underperform, Scott Melker
As trader Scott Melker pointed out, its chart has recently broken the bearish divergence, implying that cryptocurrencies will probably continue to underperform. Since the beginning of the year, the leading cryptocurrency has dropped 57.90%.
For those who chart Bitcoin Dominance (it's fishy at best), it just invalidated the bearish divergence that many were watching in hopes that it was topping and altcoins were ready to outperform.
Higher highs on price and RSI, massively overbought.
— The Wolf Of All Streets (@scottmelker) May 27, 2022
Thus according to co-founder Vitalik Buterin, a seven-block deep restructuring on the Ethereum Beacon Chain, which might combine with the primary proof-of-work chain this August, contributed to Ethereum’s poor market performance. The occurrence was linked by developers to a “non-trivial segmentation” instead of a fundamental weakness in the proof-of-stake chain. The Beacon Chain, which introduced native staking, was deployed in late December.