the reason why this question keeps coming up for different users every day is that the thing they call "market dominance" has nothing to do with actual "dominance". if we define what that number means, i believe a big part of the question is answered.
in short what CMC is calling "dominance" is simply division of bitcoin's market cap (with its ~18 mil supply) by the total market cap of 2000-3000 altcoins (with their total supply of hundreds of trillions).
so obviously when bitcoin goes up $1 its market cap goes up $18 million but if those coins go up $1 their market cap goes up hundreds of trillions. so in order to go up the same amount in market cap as bitcoin they just have to increase in price a very tiny fraction of a $1 which is why that percentage which falsely referred to as "dominance" shrank in first place and that is also why it is rising back up again.
But what about other possible use cases and some proposed innovative projects in the pipeline? Will this have an impact on crypto innovation if the industry only see a handful of other coins including BTC as viable and disregard others which might even offer superior features and innovation?
the only thing that has an impact on "crypto innovation" and has been preventing it in the past couple of years is the developer's greed. all they want is to make a ton of money in a short time. so what we have is a bunch of premined, fundraising garbage coins that have no innovation and are reusing the same things again and again.
if some day some new coin comes along with ACTUAL innovation and superiority, then it wouldn't matter if bitcoin's dominance (or more correctly market cap ratio) were 1% or 99.9999% that new coin would grow automatically and i am not talking about its price but its adoption.