According to statistics from charting platform TradingView, the dominance rate of bitcoin (BTC), the most valuable cryptocurrency by market share, has risen to a nine-month high of 45.5%.
On June 25, 2022, BTC.D last surpassed 45%.
The recent rise coincides with a turbulent two weeks for the cryptocurrency market, which saw the failure of crypto-friendly institutions Silvergate and Signature as well as the almost complete collapse of the larger banking industry. Due to the fact that BTC is regarded as a less volatile asset than the majority of other cryptocurrencies, its dominance has historically increased during times of elevated stress.
Gains in BTC’s market share have also recently coincided with a nearly three-day increase in the price of bitcoin, which on Tuesday soared past $26,000 for the first time since last summer following the publication of a marginally positive consumer price index (CPI) data for February. The crypto market saw a surge after the CPI data.
According to the research firm FundStrat Research, “A btc dominance run is often seen as a positive sign for the crypto market, as it indicates that volatility in the market is relatively low (crypto traders are opting for bitcoin over more volatile altcoins),” the company tweeted on Tuesday.
The increase, according to FundStrat, may be due to investors’ interest in bitcoin “reigniting when traditional banks like SVB are failing.”
When traders and short-term investors are feeling confident, they tend to favor the high risk/high reward offered by some of the smaller tokens, according to contributing columnist Noelle Acheson. Bitcoin is the least volatile of the non-stablecoin crypto assets.
As instability in stablecoins has grown over the past few weeks, with the second-largest stablecoin in the world, USDC, depegging from the dollar in the wake of Silicon Valley Bank’s failure, Bitcoin’s supremacy has also grown. Although USDC has more recently regained its peg, there is still uncertainty about the future of stablecoins, especially as authorities have tightened their scrutiny of this asset.
Data from CryptoQuant shows that the stablecoin supply has been gradually decreasing over the past year.