Bitcoin’s dominance in the cryptocurrency market has increased to almost 50% following the recent altcoin market slump. The Bitcoin Dominance Index (BTC.D), which tracks Bitcoin’s weight against other cryptocurrencies, reached 49.29% on June 13, slightly down from its two-year peak of 49.66% earlier in the week. The surge in Bitcoin’s dominance follows the United States’ Securities and Exchange Commission’s lawsuit against Binance and Coinbase, in which the commission accused many leading altcoins, including Cardano (ADA) and Solana (SOL), of being “unregistered securities.” Bitcoin’s market share usually rises during high market stress, as traders consider it to be the least volatile, non-stablecoin crypto asset compared to most other cryptocurrencies.
Possible Reasons for Further Growth in Bitcoin Dominance
There are other signals suggesting that Bitcoin’s dominance could grow, potentially breaking the 50% mark. DWF Labs, a crypto market maker, has reportedly sent millions of dollars worth of non-Bitcoin tokens to exchanges, potentially adding selling pressure for certain altcoins. Independent market analyst Stack Hodler also suggests that most crypto hedge funds would first and foremost abandon their altcoin exposure.
Possible Decline in Bitcoin Dominance
However, not everyone is optimistic about Bitcoin’s dominance. Fellow analyst Moustache argues that the altcoin market may have bottomed out once again, and Bitcoin will be unable to break the 50% mark. Technical charts suggest that Bitcoin’s dominance could drop in the coming weeks as altcoins rebound. BTC.D has failed to close decisively above the 50% mark since April 2021, often reversing its gains due to an overbought weekly relative strength index (RSI). Bitcoin is now facing a similar scenario with a retest of the 50% level for the first time since last summer. Meanwhile, its RSI hangs just two points below its overbought level of 70. Therefore, if history repeats, Bitcoin’s dominance will decline towards 39% by late 2023 or early 2024. However, a breakout above this level will be critical for Bitcoin, allowing it to reach levels not seen in over two years. For example, analyst Crypto Rover sees a classic bullish continuation setup, with 52% being the next significant obstacle if such a scenario unfolds.