Bitcoin Dominance Reaches New Yearly High
06 Aug, 2024 ● Kripto novosti
Bitcoin dominance — the ratio of Bitcoin’s market capitalization to the entire crypto market — reached a new yearly high of 58% amid a decline in both crypto and stock markets.
Bitcoin's dominance briefly hit 58.1% early on August 5 during a sudden sell-off that saw Ether drop by up to 18% in two hours, while BTC fell by 10% in the same period.
IG Markets analyst Tony Sycamore told Cointelegraph that this decline serves as a reminder that Bitcoin and other crypto assets are at the "pointy end" of the risk asset spectrum.
“It’s a position wash with some recession and hard-landing fears driving it and some war fears as well given the fact that Israel and Hezbollah have been exchanging rockets over the weekend, and the US is ramping up that military presence in the area,” Sycamore said.
Sycamore noted that the broader market decline in Asian markets, including an 8% daily drop in Japan’s Nikkei 225 and trading halts in South Korea, is part of a larger global risk-off move, and added:
“If you had to point to three markets or areas that did really well at the start of this year, it’d be the tech trade, it'd be Bitcoin and the Japan trade.”
“So I don’t think there’s any surprise that they’re the three trades that have fallen by the largest amount,” he further commented.
Sycamore also highlighted that Ether’s price action had been particularly affected due to the large number of other tokens and ecosystems built on its network.
“When altcoins get poleaxed it blows through into [Ether’s] price action as well,” Sycamore said, pointing to significant unwinding and sell pressure from crypto trading firm Jump Crypto.
Ether's price has fallen 30% in the past seven days, while major altcoins, including Solana’s SOL and XRP, have dropped 35% and 21%, respectively, according to CoinGecko data.
Looking ahead, Sycamore mentioned the upcoming release of the Institute of Supply Management’s (ISM) Manufacturing Purchasing Managers Index report as a potential indicator of the market's future direction:
“I think that ISM number has the potential to either calm or inflame concern because if all of a sudden we get cracking in the labor market, then it would show us the Fed has missed their window, which would probably lead to further downside for all risk assets, including crypto.”
Sycamore added that if ISM numbers moved into “expansionary territory,” it could signal a stronger market than expected, providing support for the prices of risk assets.
“But if all three manufacturing, labor market, and services point the same way, then that’s potentially really problematic,” he said.
In the past 72 hours, the crypto market has lost up to $500 billion in total market capitalization, marking the largest three-day sell-off since August 2023.
Sources:
https://cointelegraph.com/news/bitcoin-dominance-hits-58-amid-altcoin-stock-market-bloodbath
