Bitcoin Dominance Index Crashes Below 80% as Ethereum and Dash Rise

Ethereum and Dash have led the altcoin surge in March. ETH has gained around 65 percent against bitcoin since March 1, while Dash climbed more than 120 percent in the same span. ETH would need another 46 percent gain to match its previous all-time high in bitcoin terms, a level it held before a flaw in The DAO was exploited. Ethereum Classic, which emerged from the hard fork that followed, has fallen to new lows versus ETH. Grayscale Investments, which operates the Bitcoin Investment Trust, is developing a similar investment vehicle for ETC, and the project announced a hard cap on its supply.

What's driving the rally? Traders can't agree. High bitcoin transaction fees represent one possible cause. It's unclear whether those fees would push users toward altcoins for smaller transactions.

Bitcoin's dollar strength accounts for some of the speculation. In late 2013, when bitcoin crossed $1,000, altcoins surged as well. Peercoin and Mastercoin (now Omni) each reached market caps above $100 million. Litecoin peaked above $1 billion. Monero was the standout altcoin last year after gaining support on Alphabay, but the privacy coin struggled in 2017. It regained its January price this week.

If bitcoin's fees were the culprit, Litecoin would make obvious sense as an alternative. Yet the "silver to bitcoin's gold" has dropped around 25 percent against bitcoin year-to-date. The altcoin market moves without obvious explanation. These markets, though small relative to bitcoin, are almost entirely speculative. Bitcoin's high transaction fees could account for the patterns, but more data would confirm this. BitPay CEO Stephen Pair wrote that users might stick with centralized bitcoin institutions that become more decentralized through developer improvements, rather than switch to altcoins.