I think they are both correct. I guess it was orinially two words (belly dance) but one or more people just started to write it as one word, because most people know it as one concept.
I've read somewhere on a website of a bellydancer (unfortunately I don't remember which dancer) that she thinks she was the one who started to write it as one word, but she says maybe someone else she doesn't know about was first. However, now lots of people write it as one word.
My dictionary says it is "belly dancing", but I think "bellydancing" is correct too.
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