Bitcoin BTC 3.81%, the pioneering cryptocurrency, has recently seen its market dominance rise to 50%, marking a significant shift in the digital asset landscape.
This surge in dominance comes amid a backdrop of regulatory actions, institutional interest, and the performance of alternative cryptocurrencies, commonly known as altcoins.
Currently priced at $27,135, Bitcoin has maintained a steady performance over the past month, with its price remaining relatively unchanged from 30 days ago. However, its market dominance, which tracks its share in the overall digital asset market, has been on an upward trajectory. As of Monday, Bitcoin’s market dominance stood at 50.2%, marking its highest level in a month and nearing its 26-month peak of 52% reached at the end of June.
Historically, Bitcoin’s dominance has fluctuated between 39% and 49% over the past two years. It was only after asset management giant BlackRock filed for a spot Bitcoin ETF that Bitcoin’s dominance broke the 52% level, leading to a significant influx of capital into the asset.
Markus Thielen, the research director at crypto service provider Matrixport, highlighted in a recent interview that Bitcoin is experiencing increased “potential buying pressure” due to the prospects of an ETF listing. He also pointed out that altcoins might be on the verge of a downturn. Risks faced by the altcoin market include the potential bankruptcy of token sales by exchange FTX, a decline in Ethereum ETH 3.19% protocol revenues, and upcoming token unlocks that allow venture capitalists to sell their tokens.
While Bitcoin’s dominance has been on the rise, altcoins like Ethereum, BNB, and XRP XRP 1.51% have struggled to keep pace. Ethereum, Bitcoin’s closest competitor, is currently priced at $1,632.09, marking a slight increase over the past week. In contrast, BNB has seen a modest 2.4% rise over the same period, while XRP has declined by 0.4%.
Historical data suggests that Bitcoin’s market dominance aligns with its performance during bear markets. Often viewed as a digital “safe haven” by investors, Bitcoin has typically gained ground during bearish periods. Despite its recent rise, it remains below its peak levels of 52% in June and 73% in December 2020.
On the regulatory front, Bitcoin could benefit from recent proposals by the New York Financial Services Department (NYFDS). The proposed regulations include stricter rules for listing cryptocurrencies on exchanges and designating Bitcoin as a digital asset that can be listed or custodied without additional regulatory hurdles.
