Crypto Academy Season 2, Week 5 - Homework Post for @imagen

Hello Everyone,

I like to start the homework by thanking Crypto Professor @imagen for giving us this nice explanation about concept of Dominance, Altcoin Season and Behavior of Cryptocurrencies according to those concepts.

Let’s begin the homework 👇

Concept of Dominance in the world of cryptocurrencies

---

The market dominance can simply describe as ratio between market capitalization value over the asset of another currency. For example, if the total market capitalization valuation for the entire cryptocurrency space is about $100 billion at the moment. If X coin has a market cap of $50 billion, that would stand at 50% market dominance
of one cryptocurrency over the all other cryptocurrencies.

So the simple equation for the percentage of market dominance would be,

(Preferred coin market cap ÷ Total market capitalization value) x 100

Dominance of Bitcoin as at 15th May 2021

---

Let's figure out Bitcoin domination market as to the previous equation,

BTC market cap = $899,606,014,082 USD
Global Cryptocurrency market cap = $2,238,866,035,837 USD

^{Global Cryptocurrency market capitalization as at 15th May 2021 | source}

($899,606,014,082 USD ÷ $2,238,866,035,837 USD) x 100
BTC Market Dominance= 40.17%

^{Market Domination as at 15th May 2021 | source}

For a long time, Bitcoin had an absolute dominance of the market with a share of over 80% market being the first entrant to the crypto market. However, from 2017 competitors like Ethereum enter to the market with some strong Alt coins. There onwards Bitcoin's market share varied from 33 to 67% even though Bitcoin still maintain the leadership in market dominance.

^{Market Domination Overall | source}

Market behavior to the Domination

---

Cryptocurrencies in nature has strong volatility due to many factors in the market. There are many instance that if the market dominant Bitcoin fallen in value the other Alt coin will effect that too. These are some examples for that.

Bitcoin value has drastically dropped within 02days in 22nd February 2021,

Price on 22nd Feb: $57,639.40 USD
Price on 24th Feb: $47,378.68 USD
Value decrease by nearly 18%

^{Bitcoin price comparison | source}

Sudden drop had affected the other market too, This is what had happened to Litecoin.

Price on 22nd Feb: $228.76 USD
Price on 24th Feb: $169.94 USD
Value decrease by nearly 26%

^{Litecoin price comparison | source}

Ethereum also reacted same,

Price on 22nd Feb: $1971.26 USD
Price on 24th Feb: $1501.02 USD
Value decrease by nearly 24%

^{Ethereum price comparison | source}

With such instance, the most important thing is that we can understand if altcoins are in a downtrend or uptrend against market dominant Bitcoin. However, that is not directly affect all the time and not an absolute term.

What is the Altcoin Season?

---

Well that is when the Altcoin gain market dominance over Bitcoin. All this happens according to the supply and demand of the market. Usually after a Bitcoin bull run investors tend to gain profit and they might invest those income to the Altcoins. This will affect sudden growth in Altcoins and decreasing market cap for bitcoin. This flow of capital and assets referred as Altcoin season.

Brief Description of 2 Altcoins | Litecoin (LTC) & Binance Coin (BNB)

---

• Litecoin (LTC)

Litecoin was first released via an open-source client Charlie Lee on GitHub on Oct, 2011. The idea behind Litecoin name is "lite version of Bitcoin". It has the same properties as Bitcoin but lighter in weight with hashing algorithm used, hard cap, block transaction times and some other factors.

Litecoin being preferred coin for micro-transactions and point-of-sale payments with its low transaction fee and the block time speed. According to coinmarketcap, the coin is accepted by over 2000 merchants globally. Litecoin uses the proof-of-work consensus algorithm to ensure transactions are confirmed quickly and without errors.

The total maximum supply of the coin is 84 million. As of today 66,752,414.52 million LTC have already been mined out. That is about 79% of the total supply. Currently, it is in the 12th rank in terms of Market capitalization.

• Binance Coin (BNB)

Found in July, 2017 this coin belongs to the world largest cryptocurrency exchange "Binance". The name was introduced with the reason to show this new paradigm in global finance — Binary Finance, or Binance. With its popularity Binance become the leading crypto exchange in number of countries.

Binance Coin was introduced as a traditional ERC-20 token on the Ethereum blockchain. However, Binance company introduced their own blockchain which use byzantine-fault-tolerant (BFT) consensus mechanism.

The total maximum supply of the coin is 170,532,785 BNB coins. As of today 153,432,897 BNB are currently in circulation. That is about 790 of the total supply. Currently, it is in the 03rd rank in terms of Market capitalization.

How can relevant news influence the price of cryptocurrencies in a positive or negative way?

---

News has been a major factor for the demand and supply of an investor. Many tend to take decisions supporting the news they received. These are a few instance which affected such news in the cryptocurrency market.

• Elon Musk's tweet on Bitcoin

It might not be a single person affecting the cause but many people follows him and listen to what he says. That is what single tweet can do within a few hours. The price was around $54,819 USD before the tweet and it crashed to to $45,700, its lowest since March 1 after the tweet. That was about 17% strong drop.

Ethereum, also affected the bear market, and fell 14% reaching a low of $3,550, before rebounding above $4,000.

^{Market crashed after Elon Musk's tweet on 3:36 AM · May 13, 2021 | source}

• Binance Announces Listing of Shiba Inu (SHIB)

After Shiba was listed on the Binance cryptocurrency exchange coin skyrocketed its value with the demand. After a few minutes token surged by roughly 60% and then moved to all time high price with over 1000% increase of value.

Shiba founders confirmed that the coin is an experiment to decentralized spontaneous community building.

^{Spike after the announcement on11:00 AM on May 10th}

• Elon Musk's tweet on Dogecoin

This is not the first time he mentioned Doge in his tweets. The higher proportionate of doge coins are shared among 103 wallets and Elen Musk believed to be a major share holder. When he tweets sudden spikes can be seen in the chart.

^{Spikes after the Elen Musk had interest on Doge}

Penny cryptocurrency | SHIBA INU

Penny cryptocurrencies are the one listed less than $1 USD in value. Due to very cheap value any one can be a crypto pennies millionaire if they want just by spending a few bucks. SHIBA INU is one of the most recent Penny cryptocurrency which came to the market. This coin is a competitor for the "Doge Coin" and has a nick name of DOGECOIN KILLER.

Both Doge & Shiba is a meme coin. They were inspired by anime or cartoons. The rivalry between these coins made it popular coins among other penny cryptocurrencies. It might be a marketing strategy. Recently Vitalik Buterin the founder of Ethereum donated 50 trillion Shiba Inu coins to India Covid Crypto Relief Fund. Shiba is the first token that allows users to hold Billions or even Trillions coins.

Currently, Shiba Inu is being traded in the range of 0.00001507 to 0.00001917.

Investing on penny cryptocurrencies are high risk. But after proper research and exit strategy anyone can gain good amount of profit through such investment.

I hope my homework covers all the questioned asked by @imagen. Look forward for the next lesson.