bitcoin‘s general cryptocurrency market share has risen sharply since the onset of ongoing US banking sector instability almost two months ago.
Bitcoin (BTC) Dominance Rising After US Banking Crisis
Analysts said that Bitcoin’s superior performance during the banking crisis showed that Bitcoin was a liquid anti-dollar investment vehicle for investors.
Since the beginning of March, the dominance rate has risen from 42% to 49%, reaching a 22-month high, according to data tracked by charting platform TradingView.
This revealed that the largest cryptocurrency outperformed the general market.
Three US banks Silicon Valley Bank (SVB), Signature Bank (SBNY) and Silvergate Bank (SI) went bankrupt in March, triggering banking crisis fears.
First Republic Bank (FRCB) was the latest victim of the banking crisis, and shares of Los Angeles-based credit institution PacWest Bancorp (PACW) tumbled more than 60% on Wednesday.
But yesterday, Federal Reserve Governor Jerome Powell said the banking sector is “solid and resilient.”
According to Lewis Harland, Portfolio Manager at Decentral Park Capital, Bitcoin’s increasing market dominance amid banking instability and a drop in banking stocks indicates that the cryptocurrency is gaining strength against the US dollar, just like gold and oil.
BTC’s dominance rate is currently probing the high end of the last few years range. According to Harland, a breakout means that BTC’s superior performance will continue.
“Bitcoin dominance wants to break the 3-year swing pattern,” Harland said. “A break of the 50% level will likely signal a new market rebound of long-term Bitcoin performance in the market,” he stated.
Especially in this process, the increase in the market dominance of BTC shows that there is an outflow of money from altcoins and the direction shifts to BTC. As such, it is known that altcoins have been performing poorly lately.
Especially, a break above 50 percent may cause altcoins to be more crushed against BTC. However, if the resistance level cannot be broken, a relaxation up to 42 percent is likely.
If this happens, altcoins can be expected to make a mini rally in the coming period.
*Not investment advice.
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