Bitcoin Dominance Reaches Three-Year High Amid Market Turbulence
Bitcoin’s dominance in the cryptocurrency sector has reached a three-year high amid financial market turbulence on Monday (5). According to Coinglass data, the dominance – the proportion between Bitcoin’s market capitalization and that of all cryptocurrencies – is currently at 55.6989%, marking its highest level since April 2021.
At that time, the total market value of all cryptocurrencies was $1.09 trillion; today it is $1.2 trillion.
“The current market conditions are significantly different from those of April 2021,” said Ruslan Lienkha, head of markets at YouHodler, to Decrypt.
He explained that the current market is “much more transparent and liquid, with greater market depth and higher trading volume, characterized by less wash trading and fewer price manipulations.” During the 2021 cycle, Ruslan added, new cryptocurrency investors entered the market through Bitcoin purchases.
“The main driver of Bitcoin’s dominance this year is the rise of ETFs, which make Bitcoin accessible to traditional investors and institutions,” said Lienkha, adding that these investors are attracted by its unique status as a highly decentralized asset, “a feature that is difficult to replicate compared to other blockchain projects.”
Lienkha pointed to the “segmentation of the cryptocurrency market,” with Bitcoin and Ethereum increasingly integrated into the institutional and traditional financial space through vehicles like ETFs. Altcoins like memecoins are “creating their niche, driven by traders who are less interested in renowned cryptocurrencies,” he added, predicting that this trend will continue.
Bitcoin Faces Macro Headwinds
Bitcoin’s dominance reached its current highest point as cryptocurrency markets were shaken by macroeconomic headwinds and geopolitical uncertainties that caused the price of Bitcoin to fall below $50,000 on Monday morning (5).
A combination of fluctuations in interest rates, along with growing tensions in the Middle East, fueled market volatility.
Cryptocurrency markets are also grappling with the potential outcome of the US presidential race, with Republican candidate Donald Trump’s poll numbers being affected as a revitalized Democratic party rallied around Vice President Kamala Harris’ campaign.
Trump’s open endorsement of cryptocurrencies has garnered applause – and millions in campaign donations – from cryptocurrency industry executives.
While Harris is said to have made overtures to the crypto industry, her efforts to redefine relations after the current administration’s so-called “war on cryptocurrencies” were called “a bit late” by Bernstein Research.
*Translated and edited with permission from Decrypt.
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