Bitcoin’s dominance in the cryptocurrency market has reached its highest level in over two years, surpassing 49%. This is almost three times the dominance of Ethereum, the second-largest crypto. The increase in Bitcoin’s dominance, starting from 38% at the beginning of the year, signifies a significant surge in its market share. This surge can be attributed to Bitcoin’s year-long rally, with its price surging by 81% since the start of 2023. Consequently, Bitcoin has solidified its position as a leading force in the market.
There are several factors that could have contributed to this surge. First, concerns over inflation, geopolitical risks, and the increasingly polarized U.S. government have driven investors to seek safe-haven assets, reducing their exposure to risk. Bitcoin, with its decentralized nature and limited supply, has emerged as an appealing option for those seeking stability amidst uncertainty. Additionally, the potential approval of a Bitcoin exchange-traded fund (ETF) has further boosted confidence in the cryptocurrency. If approved, a Bitcoin ETF would provide mainstream investors with a regulated avenue to invest in Bitcoin, potentially attracting a significant influx of capital into the market.
Crypto financial services platform Matrixport has predicted a major Bitcoin rally if a spot ETF is launched. They estimate that if 10-20% of precious metal ETF investors consider diversifying into a Bitcoin ETF, we could witness an inflow of $12 to $24 billion into the Bitcoin ETF, potentially driving Bitcoin’s price to $42,000. Moreover, with a larger influx of $50 billion resulting from a 1% allocation recommendation by RIAs, Bitcoin has the potential to rally up to $56,000.
There is growing optimism towards the launch of a spot Bitcoin ETF. Coinbase Chief Legal Officer Paul Grewal has expressed hope that these ETF applications will be granted, as they should be granted under the law. Grewal highlighted a recent court ruling that favored Grayscale’s bid to convert its GBTC Bitcoin fund into an ETF, stating that the SEC had no grounds to deny it.