The derivative asset trading platform accessible through the Bitfinex exchange, Bitfinex Derivatives, has launched Bitcoin Dominance (BTCDOM), a perpetual swap that allows investors to take a position on the market dominance of the world’s largest cryptocurrency.
BTCDOM allows traders to speculate on the performance of bitcoin compared to seven other altcoins, thanks to the Bitcoin Dominance Index, a metric that measures the relationship between the value of bitcoin and the digital currency market.
The availability of the BTCDOM perpetual swap on Bitfinex Derivatives offers traders the opportunity to obtain a non fully directional exposure to the value of bitcoin, in the form of a contract that allows holders to speculate on the relative dominance of bitcoin over other major cryptocurrencies.
BTCDOM wants to be more efficient, in terms of capital and economy compared to a true short or long futures contract, while being less volatile.
Bitfinex Derivatives is the first crypto derivatives platform to offer the Bitcoin Dominance perpetual swap. This product will provide its users with an additional means to gain exposure to the world’s largest cryptocurrency, with the goal of strengthening the status of Bitfinex Derivatives as a reference platform for traders implementing highly sophisticated investment strategies.
Bitfinex Derivatives is a platform provided by iFinex Financial Technologies Limited, whose group also includes the Bitfinex cryptocurrency exchange.
Bitcoin dominance, measured as the percentage of BTC’s market capitalization in relation to the total market capitalization of all cryptocurrencies, is not very volatile, as it has only fluctuated within a narrow range from 61% to 70% since the beginning of the year.
Moreover, it moves very slowly, to the extent that for the past month, for example, it has been practically constant between 63% and 67%.
Last year it oscillated more, with a minimum of just over 50% and a maximum of just under 70%.
In the past, when altcoins were fewer, it was above 70%, whereas it was below 50% only during the speculative bubble of the second part of 2017, until August 2018.
The price movements of BTC often drag with it similar price movements for altcoins, even when they are sustained or sharp, greatly reducing the volatility of dominance.