The market cap of Bitcoin measured against the total cryptocurrency market cap hit 3 month highs this weekend.

Bitcoin dominance is currently sitting at around 42%, which is a year-to-date high.

It's also the highest it has been in the last 3 months:

(Source: https://coinmarketcap.com/charts/#dominance-percentage)

What is going on?

Likely there is some reversion to the mean trading going on.

What I mean by that is that over the last 6 months or so, altcoins have enjoined a strong bull market.

The strongest compared to bitcoin in some time, if not ever.

In the past, bitcoin had almost always enjoyed over a 50% share of the entire cryptocurrency market, at times even reaching over 80%.

Within the last few months it hit an all time low of around 31%.

We are likely seeing some snap-back from that decline.

Other possibilities?

Part of the reason it's share is going back up could also be due to the fact that fees are coming down and transaction times are also going down.

Which were two of the big reasons that bitcoin adoption hid a rather large speed bump late last year.

Segwit adoption is helping with this as well as order batching being implemented by some of the largest exchanges.

Bitcoin also has a major catalyst that is set to come out at some point this year that could be the real game changer for it and possibly the altcoin market as well.

The Lightning Network is likely going to be implemented this year and it will likely make transactions much cheaper and happen much faster than they are currently.

Which would likely spell major trouble for many of the altcoins out there that are being touted as payment coins as they would no longer do anything better than bitcoin.

(Source: https://news.bitcoin.com/lightning-network-alpha-release/)

My thoughts:

Overall, I think we are mostly seeing a reversion to the mean trade for bitcoin. A situation where bitcoin perhaps got a little too low in terms of its market cap dominance and is now taking some of that back.

I would say that it also looks something akin to sector rotation in the stock market. Good news is expected for bitcoin over the coming months, so investors are locking in gains in altcoins and moving back to bitcoin.

My thoughts are that bitcoin will likely hover around that 50% dominance mark until either the Lightning Network gets fully implemented (at which point I think it goes up) or some other coin/coins start to really catch on in terms of utility (at which point I think the dominance percentage goes down).

Stay informed my friends.

Follow me: @jrcornel