Bitcoin dominance increased to 47% in March as the crypto market rallied
Bitcoin dominance, the ratio of Bitcoin’s market cap to the overall crypto market, increased in March amid the recent banking crisis that saw three central US banks collapse in one week. The move coincides with a rise in the price of Bitcoin, which has also hit a nine-month high.
Bitcoin price breaks through $28,000 amid banking crisis
Bitcoin jumped above $28,000, its highest level in nine months, on Monday amid a rally that saw the flagship cryptocurrency rise more than 15% in the past week. The cryptocurrency is trading above $28,200, currently, essentially flat over the past 24 hours.
The increase comes after the current chaos ravaging the global banking system. Specifically, the collapse of three major US banks within a week and an intervention by US regulators to avert a banking crisis – all this again put Bitcoin in the spotlight as an alternative banking system.
Yassine Elmandjra, an analyst at Ark Invest, has argued that the rally is a sign of Bitcoin’s value as a safe haven. He argued that Bitcoin’s recent price behavior also suggests that the increasing regulatory pressure was not having an impact on the leading cryptocurrency, he wrote in the firm’s weekly newsletter.
“In the face of US and European banking crises, bitcoin’s price surge suggests that lax regulatory oversight had no impact on the decentralized, transparent and auditable crypto-asset ecosystem.”
“Last weekend, when many banks were closed and others faced bank runs, bitcoin didn’t skip a beat: it settled ~$33 billion, facilitated ~600,000 transactions, issued 2,037 new BTC at a steady and predictable rate of inflation of ~1.8% , attracted ~1 million new addresses and generated $43 million for miners securing the network, Elmandjra added.
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Bitcoin Dominance Hits Record 47%
Bitcoin dominance has hit a nine-month high of over 47% in the past couple of days, according to data from TradingView. The number last reached over 48% last June during the collapse of the Terra ecosystem.
Bitcoin dominance can be an important metric for experienced traders as it reveals whether Bitcoin or altcoins are performing better. Some analysts believe a higher Bitcoin dominance shows a healthier crypto market, indicating that there is not much money in more speculative altcoins.
“A bitcoin dominance run is generally seen as healthy for the crypto market as it signals that the froth in the market is relatively low (crypto traders are choosing to buy bitcoin over more speculative altcoins),” FundStrat Research noted in a tweet on Tuesday.
The growing Bitcoin dominance can also be linked to the recent de-pegging of the USDC, the second largest stablecoin in the world. As reported, the USDC began to distance itself from its link after Circle, the issuer of the stablecoin, revealed that it has $3.3 billion in an account maintained by the failed Silicon Valley Bank.
Following the revelation, USDC was hit by a wave of redemptions as concerns about its reserves grew, causing the stablecoin to lose its peg. On March 11, USDC’s price, which is supposed to be pegged to $1, fell to a record low of around $0.8774.
However, the stablecoin began to regain its peg after US regulators assured that depositors in the failed banks, including SVB, would be made whole. Notably, USDC regaining the link also helped bring in $100 million in liquidity to crypto markets.
Nonetheless, Bitcoin is currently hovering above the $28,200 mark, largely flat over the past 24 hours. The flagship cryptocurrency is up 14.4% in the last week and more than 27% in the last 14 days.
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About the author
Ruholamin Haqshanas is an accomplished crypto and financial journalist with over two years of experience writing in the field. He has a solid grasp of various segments of the FinTech space, including the decentralized iteration of financial systems (DeFi), and the emerging market for non-fungible tokens (NFT). He is an active user of digital assets for money transfers.
