Bitcoin‘s BTC/USD influence over the cryptocurrency market has surged significantly, with its dominance now reaching an impressive 56% of the total market capitalization.
What Happened: This rise marks a substantial increase from a 38% share in November 2022, according to the latest Glassnode weekly report.
The report highlights the shifting dynamics within the crypto space, where capital continues to gravitate towards Bitcoin, particularly in light of ongoing market uncertainties.
Despite the sideways price action seen recently, the conviction among Long-Term Holders (LTHs) has remained steadfast.
These investors show a strong preference for accumulating and holding onto their Bitcoin, reflecting a deep-seated belief in the asset's long-term value.
“Capital continues to flow down the risk curve, leading to a significant expansion in Bitcoin dominance,” the report states, reflecting the growing confidence in Bitcoin as a safer asset within the digital currency landscape.
Conversely, the broader crypto market, including Ethereum ETH/USD and various altcoins, has experienced a decline in dominance.
Ethereum’s share has decreased slightly by 1.5%, while stablecoins and altcoins have seen more pronounced drops of 9.9% and 5.9%, respectively, suggesting that while Bitcoin strengthens its foothold, other digital assets are struggling to maintain their appeal.
Also Read: If Jerome Powell Signals Rate Cuts On Friday, What Does That Mean For Crypto?
Why It Matters: Despite these shifts, the report notes that Bitcoin, Ethereum and stablecoins have all experienced net positive capital inflows.
This indicates that while the overall market has contracted since the all-time highs in March 2024, these assets continue to attract investor interest, particularly Bitcoin.
Amid the market’s turbulence, Long-Term Holders have been consistently locking in profits, averaging $138 million per day. This consistent sell-side pressure is balanced by sufficient capital inflows to keep Bitcoin’s price relatively stable.
However, the report also signals that the phase of aggressive profit-taking by these holders may be cooling off, which could stabilize the market further.
On the flip side, Short-Term Holders (STHs) have borne the brunt of the recent market downturn, with many locking in losses as the market corrected.
The report suggests that the extent of these losses may be indicative of an overreaction, a common occurrence in markets where emotional responses can drive exaggerated selling or buying behavior.
What’s Next: The upcoming Benzinga Future of Digital Assets event on Nov. 19 is expected to delve into these dynamics, offering insights into how Bitcoin’s growing dominance could shape the future of the digital assets landscape.
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