Bitcoin dominance, the ratio of Bitcoin’s market cap to the overall crypto market, surged in March amid the recent banking crisis that saw three central US banks collapse in one week. The move coincides with a surge in the price of Bitcoin, which has also hit a nine-month high.
Bitcoin Price Breaks Through $28,000 Amid Banking Crisis
Bitcoin jumped above $28,000, its highest level in nine months, on Monday amid a rally that saw the flagship cryptocurrency gain more than 15% over the past week. The cryptocurrency is trading above $28,200, currently, essentially flat over the past day.
The surge comes after the current chaos roiling the global banking system. Specifically, the collapse of three major US banks in a matter of one week and an intervention by US regulators to avert a banking crisis — all of which once again put Bitcoin in the spotlight as an alternative banking system.
Yassine Elmandjra, an analyst at Ark Invest, has argued that the rally is a sign of Bitcoin’s value as a safe haven asset. He claimed that Bitcoin’s recent price behavior also suggests the increasing regulatory pressure had no impact on the leading cryptocurrency, he wrote in the firm’s weekly newsletter.
“In the face of the U.S. and European banking crises, bitcoin’s price appreciation suggests that lax regulatory oversight had no impact on the decentralized, transparent, and auditable crypto asset ecosystem.”
“Last weekend, when many banks were closed, and others were facing bank runs, bitcoin didn’t skip a beat: it settled ~$33 billion, facilitated ~600k transactions, issued 2,037 new BTC at a steady and predictable ~1.8% inflation rate, attracted ~1 million new addresses, and generated $43 million for miners securing the network,” Elmandjra added.
Bitcoin Dominance Reaches Record 47%
Bitcoin dominance has reached a nine-month high of above 47% over the past couple of days, according to data from TradingView. The figure last hit a high above 48% in June last year during the collapse of the Terra ecosystem.
Bitcoin dominance can be an essential metric for seasoned traders as it reveals whether Bitcoin or the altcoins are performing better. Some analysts believe a higher Bitcoin dominance shows a healthier crypto market, indicating that not much money is in more speculative altcoins.
“A bitcoin dominance run is generally viewed as healthy for the crypto market, as it signals that froth in the market is relatively low (crypto traders are choosing to buy bitcoin over more speculative altcoins),” FundStrat Research noted in a tweet Tuesday.
The increasing Bitcoin dominance can also be linked to the recent de-pegging of USDC, the second-largest stablecoin in the world. As reported, USDC started distancing away from its peg after Circle, the issuer of the stablecoin, revealed that it has $3.3 billion in an account maintained by failed Silicon Valley Bank.
Following the revelation, USDC was hit with a wave of redemptions as concerns around its reserves mounted, leading to the stablecoin losing its peg. On March 11, USDC’s price, which is supposed to be pegged at $1, slid to an all-time low of around $0.8774.
However, the stablecoin started regaining its peg after US regulators assured that depositors at the failed banks, including SVB, would be made whole. Notably, USDC regaining its peg also helped bring in $100 million in liquidity to crypto markets.
Nevertheless, Bitcoin is currently hovering above the $28,200 mark, mostly flat over the past day. The flagship cryptocurrency is up 14.4% over the past week and more than 27% over the past 14 days.
This article originally appeared on The Tokenist
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