The dominance rate of Bitcoin, the top cryptocurrency by market capitalization, reached a 2.5-year high on Monday. According to data from TradingView, the dominance rate rose to 52.45%, its highest level since April 2021.
This increase is in line with the bullish breakout seen in June, which ended a prolonged period of trading between 38% and 48%. This breakout suggests a return of confidence in Bitcoin, as investors rotated their funds from altcoins back into the leading cryptocurrency.
The major factor contributing to this surge is the recent news around Bitcoin Exchange-Traded Funds (ETFs). Market sentiment has been positively impacted by expectations of increased institutional investment, driven by the potential approval and subsequent listing of Bitcoin ETFs.
These funds provide a regulated and risk-averse pathway for institutional investors to gain exposure to Bitcoin, consequently increasing its dominance in the cryptocurrency market.
Technical analysis carried out by Fairlead Strategies suggests that Bitcoin’s dominance rate is likely to maintain its upward trajectory in the coming days. This trend, if it persists, will serve as a reversal of the drop in dominance from 60% to 40% seen during the volatile cryptocurrency bull market of March to April 2021 – a period often referred to as ‘altseason’. During this period, investors pivoted funds from the comparatively expensive Bitcoin into alternative cryptocurrencies (altcoins), causing Bitcoin’s dominance rate to decline. This upcoming reversal indicates a change in investor behavior, potentially signaling a renewed preference for Bitcoin over altcoins.
In light of these developments, stocks directly linked to or exposed to Bitcoin have seen notable growth. One such company, Stronghold Digital Mining Inc., a U.S based crypto asset mining company that focuses primarily on mining Bitcoin, has seen a significant increase in its share value. As Bitcoin’s dominance grows, the market is responding positively, recognizing the potential profits that Bitcoin mining can generate in an environment where the leading cryptocurrency is in high demand. This rise is not restricted to Stronghold alone. Other firms with
direct or indirect exposure to Bitcoin, including MicroStrategy and Square, have also experienced a surge in their share prices.
While Bitcoin’s dominance rate has been subject to fluctuations in the past, this recent surge indicates a potential return of confidence and preference for Bitcoin over alternative cryptocurrencies. As the market eagerly awaits the decision on Bitcoin ETFs, it remains to be seen how this will impact the cryptocurrency space in the long run. However, for now, it seems that Bitcoin is reclaiming its position as the dominant player in the cryptocurrency market.