As a signal to escape the top in the bull market

In the middle and late stages of the bull market, a sharp drop in Bitcoin's market capitalization share means that funds are spilling over to Ethereum and altcoins. At this time, the cryptocurrency market is in an extremely optimistic mood. After the funds are gradually exhausted in the altcoin rotation, Bitcoin's market capitalization share also drops sharply, which is often a dangerous signal.

For example, at the end of 2017 and April 2021, after the market capitalization share continued to decline, price collapse followed. The high price and low market share at the end of 2021 also represent the unsustainable market situation.

As an entry signal in a bear market

In the early stages of the transition from a bear market to a bull market, the overall market sentiment is still relatively cautious, and investors are more inclined to invest in value-preserving currencies such as Bitcoin and Ethereum. The price start in the early stages of a bull market is generally accompanied by a rebound in market share. At this time, funds are more concentrated and the market is more collaborative.

In 2019, a small bull market started after the market share broke through the long-term oscillation range of 60%. The current market share is gradually breaking away from the bottom of the 686-day oscillation range, and the low point is gradually rising, hovering around 47%.

Future prospects from the perspective of market capitalization

BTC market share essentially represents the dominance of the "core assets" of cryptocurrencies in the overall market. Its price performance is characterized by being the first to be discovered in the early stages of a bull market and being resistant to price drops and value preservation in a bear market. The changes in market share in this round of bull market are consistent with previous cycles, but the bear market did not see a sharp rise like in 2017 and 2018.

On the one hand, the market share of stablecoins is increasing (3→15%), which can carry more risk assets in a bear market. On the other hand, the crypto market is gradually maturing, and emerging value currencies represented by ETH, Matic, etc. can also carry some capital outflows from altcoins in a bear market. For reference only, not as investment advice March 20, 2023