The influence of Bitcoin refers to the significant effect that Bitcoin’s market value has on the overall worth of all cryptocurrencies combined. Given its prominence as the most widely used and largest cryptocurrency by market capitalization, Bitcoin can sway the trends in the crypto market.
More recently, Bitcoin’s influence over the cryptocurrency market reached a three-year peak, defying expectations. In this post, we’ll explore the reasons behind Bitcoin’s rising dominance and its potential implications for the wider crypto sector.
Bitcoin Dominance Surged To 54%
Over the past three years, Bitcoin’s market dominance hovered around 52%. Recently, however, it has risen above 54%, signaling both good and bad news. The positive side is that this increase suggests growing interest in Bitcoin from investors, which historically has led to price increases.
Although Bitcoin’s growing influence doesn’t necessarily bring the same advantages to altcoins once their prices drop. The correlation between Bitcoin’s dominance and the entire crypto market isn’t consistently positive due to its intricate dynamics.
Although Bitcoin’s influence over the cryptocurrency market has grown, its price has experienced a recent downturn. Previously, Bitcoin was valued at more than $71,000, but over the last week, its value has decreased by approximately 10%.
Currently, Bitcoin’s price has been decreasing, reaching a low of $62,000 – the least it has been in the past 25 days.
The recent drop in price makes Bitcoin’s dominance more justified due to liquidation issues. As a result, Bitcoin’s share in the cryptocurrency market has reached an impressive 54% – a level not seen since April 2021.
Compared to the last day’s value, Bitcoin has succeeded in making a slight recovery.
Effect of Bitcoin Dominance On Rest of the Market
The crypto market map shows that the majority of cryptocurrencies are in the green zone, meaning their current prices fall below recent highs but remain above their average values. For example, Ethereum is currently priced at $3,166.23, which is the lowest point for the month. Prices have risen since yesterday, with Bitcoin’s dominance being more prominent then.
The price of BNB stands at $565.59, Solana at $143.43, and Cardano at $0.4682, and this pattern holds true for other cryptocurrencies as well.
A trader on platform X commented that the impact on Bitcoin (BTC) was slight, with limited overall loss. However, the real harm occurred in the Altcoin market, resulting in the erasure of over $10 billion in Open Interest and significant price drops of up to 50%.
Simultaneously, a cryptocurrency advocate makes the case that this is a clear sign of an approaching altcoin price surge. Based on his perspective, historical patterns indicate that Bitcoin’s dominance has consistently grown prior to every bull market, and the current trend in the altcoin market capitalization mirrors its behavior during the previous market upturn.
“This is the final warning before it violently surges upwards, while Bitcoin’s influence decreases,” Mikybull Crypto remarked.
Is There A Bull Run Ahead?
Starting January 2024, the crypto market showed signs of extended greed, signaling a possible prolonged bull market. However, this trend was disrupted by the latest market downturn. Consequently, the fear and greed index recorded a reading of 65 – the lowest score in the preceding 3.5 months.
Although some analysts argue for an extended bull market in Bitcoin based on past dominance trends and the approaching halving event, historical data suggests that these circumstances often trigger a correction period instead. During this time, the cryptocurrency market may experience a downturn before eventually recovering and entering a multi-month long bull run.
Conclusion
The recent increase in Bitcoin’s influence over the cryptocurrency market has caused many other digital currencies to lose ground, with most experiencing losses during this correction period. However, optimism is high that the upcoming Bitcoin halving event will mark the beginning of market recovery and potentially trigger a significant bull run. Analysts expect a bullish trend, but the crypto market is known for its unpredictability and could present various outcomes.
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2024-04-15 20:04