Bitcoin's dominance in the crypto market has reached a three-year high, driven by strong demand for US ETFs holding the asset and challenges faced by smaller tokens. As of mid-March, Bitcoin accounted for nearly 55% of the $2.4 trillion crypto market, supported by the launch of successful US spot ETFs from major issuers.
Bitcoin Reignites Dominance in Crypto Market, Driven by Robust ETF Demand
Amidst the volatility that has characterized the cryptocurrency landscape in recent months, Bitcoin has emerged as an indomitable force, reasserting its dominance with a three-year high. As of last week, the largest digital asset commanded nearly 55% of the $2.4 trillion crypto market, according to CoinMarketCap data, a level not witnessed since April 2021.
This resurgence of Bitcoin's dominance can be attributed to several factors, primarily the robust demand for US exchange-traded funds (ETFs) that hold the top cryptocurrency. The launch of three-month-old US spot ETFs by issuers like BlackRock Inc. and Fidelity Investments has been met with overwhelming success, amassing approximately $56 billion in assets to date. This influx of institutional funds has fueled Bitcoin's ascent, propelling it to a record high of $73,798 in mid-March.
While Bitcoin has modestly retreated by around 6% since its peak, smaller digital assets have faced a significant downturn, plummeting by over 30%. This decline aligns with the diminished expectations for accommodative US monetary policy, which has historically served as a catalyst for speculative gains in the crypto market.
"The allocation to US ETFs by institutional investors has significantly bolstered Bitcoin's performance compared to the rest of the market," remarked Benjamin Celermajer, director at digital-asset investment manager Magnet Capital.
In a positive sign for the broader crypto market, Bitcoin and Ether, the second-largest cryptocurrency, experienced a surge on Monday. This uptick was driven by the news that asset managers are preparing to launch Hong Kong-listed ETFs for both tokens. Bitcoin rose by 4.3% to $66,575, while Ether gained 6.2% to reach $3,260. These rallies extended to other altcoins, including Polygon, Cardano, and the ever-popular Dogecoin.
Since the beginning of last year, the Bloomberg Galaxy Crypto Index has skyrocketed by more than triple, recovering from the depths of a bear market in 2022. Crypto enthusiasts eagerly await the upcoming Bitcoin halving, an event that occurs every four years and reduces the supply of new tokens by half. Previous halvings have historically served as catalysts for price increases, although skepticism lingers regarding whether a similar outcome is probable given Bitcoin's recent surge.
Despite these uncertainties, Bitcoin's dominance in the crypto market remains unyielding. Backed by robust institutional demand and the anticipation surrounding the halving event, Bitcoin stands poised to continue its reign as the undisputed king of cryptocurrency.
