What happened

Shares of cryptocurrency miner Marathon Digital Holdings (MARA 5.63%) fell on Thursday as the price of Bitcoin (BTC -0.87%) continues its decline. Most of the company's assets and its entire business is tied to Bitcoin, so the correlation between the two is expected. Marathon Digital stock finished the session down 11%. Meanwhile, the price of Bitcoin is down roughly 4% over the past 24 hours, according to CoinDesk.

So what

Here's a brief overview of Marathon Digital's business: It provides computing power to the Bitcoin network to process transactions and, in return, is rewarded in Bitcoin of its own. The process is known as Bitcoin mining. It can then sell these Bitcoins to generate revenue. But lately it's funded operations through financing, held its Bitcoin, and even raised funds to buy Bitcoins besides those that it mines. In other words, it's pretty much gone all-in on Bitcoin, which is why the stock price tends to correlate with the price of Bitcoin.

A businessman faces a down stock chart in the background.

Image source: Getty Images.

Now what

There could be more to today's move than a simple 4% pullback in Bitcoin's price. Many traders have bid stocks like Marathon Digital and peer Riot Blockchain to pricy valuations under the assumption that the price of Bitcoin is headed much higher in the long term. After all, Marathon Digital holds 5,134.2 Bitcoins, is mining more per month, and is increasing its capability to mine more going forward. Therefore, there's a scenario where the valuation of these stocks makes sense. Bitcoin just has to go high enough.

However, something just happened that may have some cryptocurrency enthusiasts reevaluating this space. Bitcoin has long been the dominant cryptocurrency -- a reality referred to as "Bitcoin dominance." However, as of this writing, the current valuation of the entire cryptocurrency market is $1.98 trillion, according to CoinMarketCap. The valuation of Bitcoin is just under $985 billion, meaning it's less than 50% of the total market. That's the first time since 2018 that this has happened.

Some may fear that Bitcoin is losing its dominance as other cryptocurrencies take market share. This situation, if it continues, puts a big question mark on how high the price of Bitcoin can go. 

My advice, however, is to take all of this with a grain of salt. Bitcoin has pulled back in recent days which is why Marathon Digital stock is down. And it's possible other cryptocurrencies are rising in popularity. But a few days or even a couple of weeks doesn't establish a long-term trend. In the past, this market has been volatile and will likely continue to be volatile. Therefore, it's best to calmly step back and think as big-picture as possible to avoid getting sucked into the emotions of these daily price swings.