While the crypto market was in turmoil over the weekend, the dominance of the leading cryptocurrency reached a high of three years.
Coinglass revealed data showing that Bitcoin’s dominance had climbed to 55.6989%. This refers to the ratio of its market cap to the rest of the cryptocurrencies in the market.
The last time Bitcoin had seen its dominance reach this point was back in April 2021. At that time, the total market capitalization of all cryptocurrencies stood at $1.09 trillion. Today, it is $1.2 trillion.
The Conditions
According to market experts, the current conditions of the market are significantly different from what they had been back in April 2021.
The crypto market is considerably more liquid and transparent and it has greater depth. Moreover, the trading volume is also high, as there are fewer price manipulations and reduced wash trading.
In the 2021 market, Bitcoin purchases were the only way through which crypto investors had chosen to participate in the market.
Today, it is the launch and popularity of spot Bitcoin ETFs that has pushed up Bitcoin’s dominance. Due to these products, it has now become accessible to institutions and traditional investors alike.
The fact that Bitcoin is a highly decentralized asset has drawn a greater number of investors because other blockchain projects find it difficult to replicate this feature.
The Possibilities
Other experts suggested that the reason behind Bitcoin’s dominance could be the investors’ desire for safety in the crypto market.
A greater number of investors may have decided to shift their focus back on the original crypto token because it is the most established one in the market.
Therefore, they consider it the safest option in the crypto niche as compared to other riskier and smaller altcoins.
The crypto market has become increasingly segmented of late. This is due to the fact that the launch of vehicles like ETFs has integrated Bitcoin and Ethereum into the traditional and institutional finance world.
Altcoins
As far as altcoins, such as meme tokens, are concerned, they are popular amongst traders who are not interested in established crypto tokens. This trend is expected to continue.
However, the fact that there are now more institutional investors in the crypto space means regulatory developments and macroeconomic factors will have an impact.
This could make it difficult for altcoins to maintain interest. This is because they do not have the same level of backing and institutional support as the likes of Bitcoin and Ether.
Macroeconomic headwinds and geopolitical tensions have been wreaking havoc in the crypto market already. Despite that, Bitcoin’s dominance has climbed to its 3-year high.
But, the price of Bitcoin took a hit, as it fell below the $50,000 mark on Monday. Market volatility is high due to tensions in the Middle East and interest rate fluctuations.
Crypto markets are also dealing with the uncertainty surrounding the outcome of the US presidential elections.
Republican candidate Donald Trump has won lots of donations and plaudits due to crypto support. Meanwhile, his Democratic opponent, Kamala Harris has been struggling in this regard.