Bitcoin Dominance Grows As Crypto Risk Appetite Remains Low
July 26 2022 - 05:05PM
NEWSBTC
The crypto market has been moving in the red during today’s trading
session with Bitcoin and Ethereum surrendering the past week’s
gains. The first cryptocurrency by market capitalization seems to
be reacting to the Federal Open Market Committee (FOME) meeting set
for tomorrow. During this event, the U.S. Federal Reserve (Fed) is
expected to potentially announce an increase in interest rates.
Projection aimed at a 75 basis points (bps) hike, but the financial
institution might surprise the market with a 100 bps in an attempt
to cut down inflation. The Consumer Price Index (CPI), a metric
used to measure inflation in the U.S. dollar, stands at a
40-year-old high. This has forced the Fed to shift its monetary
policy by hiking interest rates, reducing its balance sheet, and
removing liquidity from global markets. As a consequence, Bitcoin
and the crypto market have been trending to the downside. The
benchmark crypto saw a period of relative stability when it was
able to stabilize at around $20,000, BTC’s price current level. The
altcoins sector was less fortunate as Ethereum (ETH), Cardano
(ADA), Solana (SOL), and other major cryptocurrencies broke below
critical resistance. Some altcoins return to their 2020 levels as
Bitcoin dominance trended to the upside. This is an indication of
uncertainty and risk-off sentiment in the crypto market. The metric
saw a decline over the past two weeks on the back of expectations
of mitigating inflation, supported by a drop in the price of
commodities, and the announcement of a date for the Ethereum
“Merge”. Data from Arcane Research supports the above as the
research firm records a decrease in performance for their Large,
Mid, and Small Cap Index. As seen below, these indexes have been
recording heavier losses than Bitcoin as BTC Dominance picks up
bullish momentum. Bitcoin Dominance Spike Hints At Crypto Market
Uncertainty Arcane Research noted that the overall weakness in the
sector is driven by a “natural rotation as traders seek safety in a
falling market”. The increase in Bitcoin dominance has been
accompanied by a rise in stablecoin total market share. In other
words, market participants are buying Bitcoin and stablecoins to
protect them from potential downside risks. The report stated:
Ether’s lack of strength relative to bitcoin has caused its market
dominance to fall 0.34% over the last week. On the other hand,
Bitcoin has seen its market share increase by 0.47%. This is a
natural rotation as market fall, given that investors perceive
bitcoin as a lower-risk asset than ether. Tomorrow’s FOMC meeting
will decide the short-term fate of BTC dominance and the fate of
larger cryptocurrencies.
Cardano (COIN:ADAUSD)
Historical Stock Chart
From Feb 2024 to Mar 2024
Cardano (COIN:ADAUSD)
Historical Stock Chart
From Mar 2023 to Mar 2024