Bitcoin Dominance Climbs to Multi-Year High as Altcoins Experience Sharp Corrections

Key Insights:

The crypto market has witnessed both significant growth and corrections this week.

Bitcoin achieved a new all-time high of $89.9K, while Ethereum surpassed $3,000.

Dogecoin surpassed both XRP and USDC in market capitalization.

Altcoins have experienced sharp corrections, while Bitcoin has remained steady, increasing its market dominance to almost 60%.

Bitcoin Market Dominance Approaching 60%

Bitcoin hit a record high of $89.9K, stabilizing around $86K at the time of writing. This surge has established Bitcoin as one of the week's top gainers, boosting the overall crypto market capitalization to near $3 trillion due to its high market share.

Bitcoin's market dominance currently stands at around 59.8% and is projected to reach 60% by the end of the week, driven by weaker altcoin performance and strong investor support for Bitcoin.

Bitcoin's Market Dominance History

Bitcoin's dominance has evolved through four key phases in the past decade.

2013-2024: Bitcoin Dominance Trajectory

Analysts initially believed Bitcoin's dominance would decline as the crypto market matured. This trend held true until 2018, when Bitcoin's dominance reached a low of 34%. In 2019, Bitcoin experienced a significant rally, boosting its dominance from 34% to 70%, as it surge from $3.6K to $12.1K. This growth gradually subsided starting in 2021.

From early 2021 to late 2022, Bitcoin's market share fell from 69.2% to 38.3% amid the crypto winter and Bitcoin ETF launches. However, the current phase has been marked by strong growth, with Bitcoin's price rising from around $16K in early 2023 to nearly $90K by late 2024, lifting its dominance from 38% to 60%.

This recent surge has been driven by institutional interest, including Bitcoin ETFs and increased investments from major firms, a factor not observed in previous phases. However, Bitcoin's dominance may have peaked as its price stabilizes around current levels.

Why Are Altcoins Struggling?

While altcoins experienced short-term gains, such as Ethereum surpassing $3,000 and Solana reaching its 2024 high of $210, these assets quickly corrected after their peak.

The reasons for these corrections are likely to become clearer by week's end. However, profit-taking appears to play a significant role. Bitcoin receives consistent support from institutional investors, while altcoins tend to lack such commitment, leading to volatility.

Market Outlook

The market may recover to recent highs as capital inflow has remained steady in recent weeks. This consistent influx is largely attributed to the Federal Reserve's recent 0.75% rate cut, which has directed significant liquidity into crypto, pushing the market capitalization to $3 trillion.

Historically, markets have recovered from profit-taking corrections like those seen this week. During these rally-driven spikes, derivatives data tends to become highly volatile, leading to rapid fluctuations, as observed in recent days.

This volatility is expected to diminish within the next two weeks, with the market likely to stabilize at higher levels by late November 2024.