Bitcoin’s market dominance has been climbing in March and is now up to levels not seen since June. A crypto asset’s “dominance” measures how much of it makes up the total cryptocurrency market cap. Investors use it to determine which parts of the crypto market are outperforming or underperforming relative to their peers. When bitcoin dominance climbs, it implies that bitcoin is doing well, but more specifically, it means its outperforming altcoins. Bitcoin dominance has risen steadily since March 8, the day after Silvergate Bank announced its voluntary liquidation. It’s currently at its highest level since June 10, according to TradingView. Michael Rinko, research analyst at Delphi Digital, said he views this move as “entirely macro driven,” which partially explains, he added, why it’s limited to bitcoin. “Most of the flows are going into bitcoin as opposed to the broader crypto space,” he said. “That’s reflecting a view that a lot of macro investors have, that we’re either at or very near the bottom of this macro cycle.” The Federal Reserve and its inflation fighting rate hiking campaign has been a big focus for investors, but particularly so following the shutdown of Silvergate Bank, Silicon Valley Bank and Signature Bank. As the banking crisis has unfolded, bond yields have come down substantially, Rinko noted. Bitcoin is sensitive to global liquidity. Last Sunday, the Fed collaborated with other global central banks to make sure dollars would be available to stem any liquidity concerns in the financial system. Bitcoin rose 3% that day. “That combined with narrative is why we’re seeing bitcoin run up and the move only impacting bitcoin as opposed to the rest of the space,” Rinko added. Specifically, since the fall of the three U.S. banks, the narrative that bitcoin could be an alternative means of transmitting money or storing wealth has built, he said. Noelle Acheson, economist and author of the Crypto is Macro Now newsletter, added that bitcoin’s dominance is also partly thanks to the regulatory uncertainty plaguing other crypto assets in the market – in addition to the macro drivers. Investors have been watching a regulatory crackdown on U.S. crypto companies that began in February. So far this year, the Securities and Exchange Commission delivered an enforcement action against Kraken , a Wells Notice of a future settlement against Paxos as well as Coinbase, as of Wednesday . The New York State Department of Financial Services has ordered Paxos to stop minting the Binance USD (BUSD) stablecoin and more recently and significantly, it decided to shut down crypto-focused Signature Bank, although the agency has maintained that closure was not about crypto. These actions have been easily shrugged off by bitcoin investors but bring a lot of uncertainty to other crypto asset networks.
