Bitcoin’s dominance in the cryptocurrency market has surged past 49%, marking its highest level in more than two years, according to data from CoinGecko. This dominance places Bitcoin in a commanding position, overshadowing Ethereum (ETH), the second-largest cryptocurrency, with a dominance of approximately 16.7%, media reports said.
This upward trajectory in Bitcoin’s dominance, which commenced at around 38% at the beginning of the year, signifies a substantial expansion in Bitcoin’s market share. The surge is closely correlated with Bitcoin’s year-long rally, witnessing an 81% increase in price since the start of 2023 and solidifying its standing as a dominant force in the market.
Several factors are believed to contribute to this surge. First and foremost, concerns regarding inflation, geopolitical risks, and the divisive U.S. political landscape have steered investors towards safe-haven assets, reducing exposure to risk. Bitcoin, characterized by its decentralized nature and limited supply, emerges as an attractive option for those seeking stability amid uncertainties.
The prospect of regulatory approval for a Bitcoin exchange-traded fund (ETF) has further fueled confidence in the cryptocurrency. Approval of a Bitcoin ETF would offer mainstream investors a regulated pathway to invest in Bitcoin, potentially ushering in a significant influx of capital into the market.
Matrixport, a crypto financial services platform, anticipates a substantial Bitcoin rally in the event of a spot ETF entering the market. Drawing parallels with precious metals ETFs, Matrixport suggests that a portion of precious metal ETF investors, diversifying into a Bitcoin ETF as a hedge against monetary debasement and inflation, could result in an inflow of $12 to $24 billion into the Bitcoin ETF.
