Bitcoin's outperformance during the banking crisis indicates the cryptocurrency is the anti-dollar liquid play for investors, one portfolio manager said.

Bitcoin's (BTC) dominance rate, measuring the cryptocurrency's share in the broader market, has risen sharply since the onset of the ongoing U.S. banking sector instability almost two months ago.

Since early March, the dominance rate has increased from 42% to 22-month highs near 49%, indicating the top cryptocurrency's outperformance relative to the broader market, according to data tracked by the charting platform TradingView.

The SPDR S&P regional banking ETF, which seeks to replicate the performance of an index derived from the regional U.S. banks, has tanked by 35% over the same time frame.

In March, three U.S. banks – Silicon Valley Bank (SVB), Signature Bank (SBNY) and Silvergate Bank (SI) – failed, triggering fears of a full-blown banking crisis. First Republic Bank (FRCB) became the latest victim of the banking crisis and to complicate matters, shares in Los Angeles-based lender PacWest Bancorp (PACW) plummeted over 60% on Wednesday.

However, Federal Reserve Chairman Jerome Powell said the banking sector is "sound and resilient."

According to Decentral Park Capital's Portfolio Manager Lewis Harland, bitcoin's growing market dominance amid the banking sector instability and the slide in banking stocks is evidence of the cryptocurrency's strengthening appeal as anti-U.S. dollar play or bet on the dollar weakness just as gold and oil.

"You see outperformance of BTC within the crypto market when regional bank share prices collapse. This signals that BTC is the high-quality anti-dollar liquid play for investors as the crisis unfolds further," Harland told CoinDesk.

Expectations for renewed liquidity easing by the Federal Reserve (Fed) have strengthened amid the banking crisis, signal dollar weakness ahead. On Wednesday, the Fed raised interest rates by 25 basis points and opened the doors for a potential pause in June.

The dominance rate stood at 48.5% at press time, having recently set a high of 48.9%. (Decentral Park Capital) (Decentral Park Capital)

BTC's dominance rate is now probing the upper end of the multi-year range. A breakout would mean continued BTC outperformance, according to Harland.

"Bitcoin dominance is looking to break its 3-year oscillation pattern," Harland said. "A break of 50% would likely signal a new market regime of prolonged BTC outperformance within the market."

Bitcoin picked up after regulators Silicon Valley Bank of March 10 and has rallied 48% to $29,100 since then, CoinDesk data show. The run higher is reminiscent of the positive performance during the 2013 Cyprus banking crisis.

source: coindesk

mage source: ai

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Disclaimer

The views and opinions expressed by the author, or any people mentioned in this article, are for informational purposes only, and they do not constitute financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.

Bitcoin Dominance Soars to a 2-Year High: Implications for Altcoins

Bitcoin Dominance:

Bitcoin dominance has recently reached a two-year high, currently trading at 51%. This surge in dominance has important implications for the broader cryptocurrency market, particularly altcoins. In this report, we will analyze the #bitcoin dominance chart and discuss its potential impact on altcoins. We will explore the reasons behind the dominance increase, highlight key support and resistance levels, and provide insights for investors navigating this evolving landscape.

Understanding Bitcoin Dominance

#Bitcoindominance refers to the market capitalization of Bitcoin compared to the total market capitalization of all cryptocurrencies. It is a widely followed metric that provides insights into the relative strength of Bitcoin compared to other digital assets. When Bitcoin dominance is high, it indicates that Bitcoin's market capitalization is growing faster than altcoins, which can have significant consequences for the altcoin market.

Current State and Historical Analysis

At 51%, Bitcoin #dominance has reached its highest level in the past two years. This indicates a significant shift of funds from altcoins to Bitcoin. Based on historical patterns, it is noteworthy that after 777 days, Bitcoin dominance has typically made new highs. Therefore, it is essential to closely monitor the evolving dominance trend and its potential implications for the broader cryptocurrency market.

Impact on Altcoins

The recent increase in Bitcoin dominance suggests that investors are reallocating their funds from altcoins to Bitcoin. This reallocation can lead to a bearish outlook for altcoins in Bitcoin pairs. As Bitcoin $BTC continues to attract more investment, altcoins may experience a decline of 40-60% from their current levels. The trend indicates that funds are exiting altcoins, causing a decrease in their value relative to Bitcoin.

Support and Resistance Levels

Currently, the support level for Bitcoin dominance is at 48%. If Bitcoin dominance maintains above this level, it suggests that altcoins may face a substantial crash in the near future. Therefore, investors should pay close attention to this critical support level as it could be indicative of significant market shifts.

Moreover, the resistance level for Bitcoin dominance is at 63%. If Bitcoin dominance surpasses this level, it could signify further market dominance for Bitcoin and potentially lead to continued declines for altcoins in Bitcoin pairs.

Summary:

The recent surge in Bitcoin dominance has important implications for the altcoin market. Investors should closely monitor the evolving dominance trend and be prepared for potential declines in altcoin prices. However, it is important to note that the #cryptocurrency market is volatile and unpredictable.

Recommendations

Based on the analysis in this report, we recommend the following for investors:

Monitor the Bitcoin dominance chart closely and be prepared for potential declines in altcoin prices.

Consider allocating a portion of your portfolio to Bitcoin, as it is likely to remain the dominant cryptocurrency in the long term.

Do your own research on altcoins before investing, as some of them may be more vulnerable to the effects of rising Bitcoin dominance.

#dyor

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$ETH $BNB

Last week, Bitcoin Dominance (BTC.D) surged to 49.2%, marking its highest level since April 2021. This upward trend has prompted concerned investors to flock back to Bitcoin, leading to increased demand on crypto exchanges. As BTC gains momentum, the question arises: will it overcome the resistance at $27,000 and continue its ascent?

Bitcoin (BTC) Crypto Market Dominance June 2023

Bitcoin Dominance Hits Two-Year Peak

Since June 5, BTC.D has witnessed a two-percentage-point increase, reaching 49.30%, a level not seen in two years. BTC.D measures the percentage of the global cryptocurrency market's valuation comprised by Bitcoin's market capitalization. The sharp rise in BTC.D indicates a shift in market sentiment away from altcoins, as investors show diminished interest in them. This sentiment aligns with the 13% decline in the altcoin market capitalization following the US Securities and Exchange Commission's lawsuit against Binance on June 5.

Historical Patterns and Investor Behavior

Historically, BTC prices have often experienced surges in response to sudden spikes in BTC.D. If altcoin prices continue to decline, this pattern is likely to repeat, offering BTC holders the prospect of further price upswings in the coming weeks. To validate this hypothesis, crypto traders are increasingly placing buy orders for Bitcoin, as indicated by the order books of various exchanges. Currently, there is a supply shortage of 3,000 BTC across exchanges, intensifying upward price pressure as buyers compete to fill their orders quickly.

Critical Resistance at $27,000

Despite the bullish outlook, IntoTheBlock's In/Out of The Money Around Price (IOMAP) data suggests that BTC may encounter initial resistance around the $27,000 mark. Approximately two million investors, who purchased 866,000 BTC at an average price of $27,055, could trigger a pullback in this zone. However, if BTC successfully surpasses this resistance level, it could pave the way for a climb towards $29,000, a level not seen since April.

Crypto Traders are Queuing Up More Buy Orders - Aggregate Exchange Order Books

Potential Bearish Scenario and Support Zones

On the other hand, if BTC unexpectedly drops below the critical support zone at $25,200, the bullish price recovery may be invalidated. However, the presence of 350,000 investors who acquired 206,000 BTC at a minimum price of $25,212 is likely to prevent such a drop. Nevertheless, in the unlikely event that the support level fails to hold, BTC could retrace further towards $23,500.

Upcoming Interest Rate Decision

It is important to note that the United States Federal Reserve will announce its next interest rate decision on June 14. As a result, strategic whale investors may refrain from making significant trades until this announcement, as it could have implications for the crypto market.

Bitcoin (BTC) Price Prediction, June 2023

With the altcoin market facing uncertainty and investors seeking refuge in Bitcoin's censorship-resistant qualities, BTC's price dominance is expected to increase in the coming weeks. While initial resistance at $27,000 may pose a challenge, successful clearance could lead to further gains towards $29,000. Conversely, a drop below the critical support at $25,200 could undermine the bullish outlook. Traders and investors should also consider the upcoming interest rate decision by the United States Fed when making their strategic decisions.

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