A brand new product by crypto alternate Binance will quickly enable merchants to guess on Bitcoin’s rising or reducing share of the crypto market, it stated in a release in the present day.
#Binance Futures Will Launch USDⓈ-M BTCDOM Perpetual Contracts with As much as 25X Leverage
— Binance (@binance) June 17, 2021
Supplied underneath the ‘BTCDOM’ ticker, the product is a cryptocurrency worth index that displays the market dominance efficiency of Bitcoin by evaluating the asset to the highest 20 cryptocurrencies on Binance by market capitalization (excluding stablecoins).
“The BTCDOM Index is a metric that merchants can use to shortly get a way of Bitcoin’s worth relative to that of the broader cryptocurrency market,” stated Binance within the put up.
Bitcoin’s dominance is a measure of the asset’s market share relative to different cryptocurrencies.
It, because the picture under exhibits, accounted for as excessive as 93% of all the crypto market in 2013, fell to its lowest 33% in January 2018, recovered to over 69% in 2020, and has since fallen to 43% as of in the present day. (Word: This chart compares Bitcoin to all different cryptocurrencies whereas BTCDOM is relative to simply 20. Figures could therefore fluctuate.)
Bitcoin dominance and makes use of
BTCDOM might be a ‘perpetual’ contract, a time period for a futures product with no expiry date. It will likely be Tether margin (use USDT as collateral) and merchants may have entry to 25x leverage.
As per Binance, the BTCDOM Index gives insights into the market and can be utilized as a instrument to take a position on Bitcoin’s relative power in opposition to different cryptocurrencies.
For merchants, this might enable them to make a macro guess on the crypto market if altcoins achieve market share relative to Bitcoin (the index will lose worth). Vice versa, if altcoins lose market share relative to Bitcoin, the index will achieve worth and merchants will have the ability to squeeze out a revenue (or hedge their bets).
Nevertheless, the index is unlikely to alternate between gaining worth and dropping worth. “In sure circumstances, if Bitcoin falls in worth, however the remainder of the cryptocurrency market falls at an analogous fee, then Bitcoin dominance is more likely to stay the identical,” Binance defined.
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