Despite relatively stable prices over the past month, Bitcoin’s market dominance, representing its share of the entire cryptocurrency market, has been steadily increasing. As of Tuesday, Bitcoin held more than 50% of the cryptocurrency market, with a valuation of nearly $520 billion and a price of $26,690.
This rise in market dominance coincides with a period in which many alternative cryptocurrencies have either stagnated or seen declining values. However, it’s worth noting that Bitcoin is still about 5% below its peak in June and 23% lower than its peak in January 2022.
On Monday, Bitcoin’s market dominance rate reached 50.2%, its highest level in a month and close to the 26-month high of 52% achieved at the end of June.
Bitcoin’s market dominance had remained between approximately 40% and 49% for over two years before reaching 52% in June. This increase was sparked by asset manager BlackRock’s application for a spot Bitcoin exchange-traded fund (ETF), which raised expectations of significant inflows into the asset class.
Investors are currently preparing for a possible drop in Bitcoin’s value in September, historically a challenging month for the cryptocurrency. This cautious outlook is reinforced by increasing concerns about a global economic downturn and persistently high inflation.
However, some analysts believe that Bitcoin could experience a significant price increase due to an anticipated influx of new investments. This surge could help Bitcoin maintain its dominance in the competitive cryptocurrency market.
Markus Thielen, the head of research at crypto services provider Matrixport, pointed out that Bitcoin has more “potential buying pressure” from ETF listings, while altcoins may be at risk of declining further. He cited factors like decreasing Ethereum protocol revenues and upcoming token unlocks as potential risks for the altcoin market.
Macro analyst Noelle Acheson also suggested that Bitcoin could benefit from recent regulatory changes proposed by the New York Department of Financial Services (NYFDS). These changes include stricter rules for listing cryptocurrencies on exchanges while simplifying the process for listing or custodying Bitcoin without additional regulatory hurdles.
As the cryptocurrency market faces a significant liquidity shortage, Bitcoin’s resilience and popularity remain evident. Despite experiencing a rapid retracement after a 2% increase in value, Bitcoin has shown its ability to achieve significant gains during market downturns. It continues to be the leading and most recognized digital currency, reflecting investors’ responses to current events and its position relative to stablecoins and NFT tokens.