Bitcoin dominance reached a new year-to-date high of 58%, driven by a significant selloff in altcoins and global stock markets. The flagship crypto lost 10% in two hours against market fears, including economic data uncertainty, recession, and geopolitical tensions, as per TOBTC, a crypto trader and analyst.
They added that the cryptocurrency market had shed $500 billion in capitalization over the past three days, marking the largest selloff over such a brief period since August last year. What do we make of the Bitcoin dominance?
#Bitcoin dominance has reached a new yearly high of 58%, driven by a significant sell-off in #altcoins and global stock markets.
This decline saw #Ether drop by 18% and Bitcoin by 10% within two hours, amid wider market fears including recession, geopolitical tensions, and… pic.twitter.com/4JuUxXizwg
— TOBTC (@_TOBTC) August 5, 2024
The latest data reveals that Bitcoin accounts for 58% of the total market capitalization of all cryptocurrencies. Bitcoin’s dominance today indicates its significant influence and leading role in the cryptocurrency market.
Further Bitcoin drop will push altcoins down
Bitcoin’s price movements often influence the entire cryptocurrency market. Its high dominance means that trends in Bitcoin can have a ripple effect on altcoins. If Bitcoin continues to fall, altcoins may also continue to decline.
A higher dominance suggests that a large portion of investor funds is allocated to Bitcoin compared to other cryptocurrencies, indicating greater investor confidence in Bitcoin’s stability and potential.
When Bitcoin’s dominance increases, it might indicate a risk-averse environment in which investors prefer Bitcoin’s relative safety over more volatile altcoins. Conversely, a decrease in dominance might suggest a higher appetite for risk and interest in altcoins.
Higher dominance typically correlates with higher liquidity for Bitcoin, making it easier to sell and buy large amounts without significantly affecting the price.
Factors behind Bitcoin and altcoin fall
The exacerbated conflict between Israel and Hezbollah over the weekend and the increased US military presence in the area are contributing to the crypto market bloodbath. Japan’s Nikkei 225 lost 8%, and the South Korean trading suspension affected the market.
Selling pressure from Jump Crypto, Jump Trading’s crypto trading arm, saw Ether lose 20%. On Sunday, Jump Crypto offloaded ether worth millions in what looks like a closure of the majority of its positions.
According to blockchain data from Arkham, Jump’s wallets moved millions into hot wallets at Coinbase, Binance, OKX, Bybit, and other exchanges through Sunday. Ethereum has erased its yearly gains and is trading for just $2,351 at the time of writing.
