Bitcoin's market cap dominance has reached 57.21%, the highest mark since April 2021, according to TradingView. What does this mean? Should a bull run be expected and an altcoin season after the BTC halving, or is this trend a relic of the past?
Bitcoin's dominance can increase in both a rising and falling market. Therefore, to analyze this trend, one needs to consider the overall situation. The BTC dominance chart will be useful for experienced traders and investors and useless for beginner investors. Therefore, the dominance index should be considered in dynamics, taking into account fundamental factors.
Bitcoin's dominance increases when:
Bitcoin becomes more expensive, while altcoins lose value
Bitcoin becomes more expensive at a faster pace than altcoins
Bitcoin consolidates within a limited range, while altcoins lose value
Bitcoin gains value, while altcoins consolidate within a limited range
Bitcoin loses value at a slower pace than altcoins
The rise in bitcoin dominance is currently driven by the following factors:
Bitcoin was losing value at a slower pace than altcoins. Amid mass liquidations of long positions, bitcoin showed steadier performance, while altcoins were falling at a faster pace.
Investors preferred to exit altcoins, rotating into stablecoins or bitcoin. This is due to the high liquidity of BTC compared to other crypto assets, which made it possible to use it to close long positions in altcoin pairs.
Risk appetite has weakened across all markets, including stocks, gold, cryptocurrencies and currencies.
· US data has increased recession fears.
· Large transfers from Mt. Gox and Genesis Trading have raised concerns about increased supply in the market.
· Following Friday's rout in US indices, Asian markets also nosedived, pointing to a massive investor shift away from risk-sensitive assets.