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Bitcoin’s Market Dominance Hits 2-Year High

Bitcoin's market dominance hits 2-year high

When altcoins are in the eye of the hurricane, bitcoin’s market dominance returns to May 2021 levels.

  • Bitcoin dominates 47.6% of the cryptocurrency market. Ether only 19.9%.
  • Prices of altcoins fell sharply in just a few days.
  • BlackRock to launch Bitcoin ETF.

Bitcoin’s Market Dominance Hits 2-Year High. The dominance of Bitcoin (BTC) in the cryptocurrency market is at levels not seen in over two years due to the crisis that altcoins are experiencing due to the signals from the U.S. Securities and Exchange Commission (SEC) that they are valuable securities. As the graphs offered by CoinMarketCap show, bitcoin controls 47.6% of the entire cryptocurrency market. It far exceeds the dominance of ether (ETH), which controls 19.9% of the ecosystem. The following image shows that Bitcoin’s current market dominance is the highest since May 2021. The chart compares Bitcoin’s market dominance in contrast to the dominance of other cryptocurrencies on the market.

Bitcoin’s market dominance hits 2-year high (Source: CoinMarketCap)

Altcoins are valuable securities, according to the U.S. SEC

The rise in Bitcoin’s dominance comes as users shift their holdings from other crypto assets to BTC after the U.S. SEC said that at least 12 cryptocurrencies are considered valuable securities. The U.S. securities regulator sued cryptocurrency exchanges Binance and Coinbase. It alleged that they offered securities to Americans without registration, which translates into violating federal securities laws. Those securities, according to the SEC, are Solana’s SOL cryptocurrencies, Cardano’s ADA, Axie Infinity’s AXS, Filecoin’s FIL, Sandbox’s SAND, Decentraland’s MANA, Cosmos’ ATOM, Algorand’s ALGO, Polygon’s MATIC, and Coti’s COTI tokens. They also include BNB, Binance’s cryptocurrency, and BUSD, the stablecoin that came to be supported by that exchange.  

The price of all these cryptocurrencies fell sharply after the SEC’s warning became known. Since June 8, the prices of these assets have been in the red. This situation worsened last weekend when most of the assets rated by the regulator fell more than 20% in hours. As they are considered securities, the assets are subject to regulation and supervision by the Securities and Exchange Commission. That agency views them as financial instruments with intrinsic monetary value that people can trade in the markets.

The impact caused to the market by the SEC’s characterization of cryptocurrencies as security is due to the critical influence that regulatory entities maintain over the crypto-asset ecosystem. Add to that the FUD (fear, uncertainty, and doubt) that became widespread among the community due to the lawsuits. In addition to migrating other cryptocurrencies to Bitcoin, which response to the increase in its dominance, there have also been reports of significant exits from exchanges. More and more people are taking their money out of the exchanges. People withdraw more than 80 thousand bitcoins from exchanges. On June 7, shortly after the SEC’s complaint against Binance became known, the company registered withdrawals of $691 million, more than 50% of all withdrawals reported by the other exchanges. 

Bitcoin is not affected by the altcoins crisis.

While all this is happening around Bitcoin, the pioneering cryptocurrency is not as affected by these events. The lawsuits and the altcoins crisis have not affected this asset to a great extent. They only reported high volatility at the beginning of last week, which has already subsided. Bitcoin is not directly affected by these events because the purpose of BTC is different from that of many altcoins.  

Different from the projects known and pointed out by the SEC, there is no foundation or team of promoters behind Bitcoin. Nor a figure of a financial instrument in which one invests for profitability. Bitcoin is digital money.

BlackRock to launch a Bitcoin ETF

According to sources, BlackRock, the world’s largest asset manager, is serious about filing for a Bitcoin ETF. The company will use Coinbase as the custodian for the ETF, as well as the exchange’s spot market data for pricing. This information has yet to be corroborated by Coinbase. Coinbase and BlackRock partnered last year to make cryptocurrencies available to institutional investors. The U.S. Securities and Exchange Commission has rejected all applications for a spot Bitcoin ETF, although it has approved Bitcoin futures ETFs. The type of ETF BlackRock wishes to market needs to be clarified. However, the company will need the respective approval of that country’s regulatory body to operate it.

The reality is that the regulator has been reluctant to approve this type of investment vehicle. Many companies have been rejected by the SEC for approval of such products. An ETF is an investment vehicle that replicates the price of an underlying asset without the need to own it. In the case of Bitcoin, you do not directly acquire the asset; you make an investment based on the price it marks. Reports suggest that the investment giant is highly interested in Bitcoin, even in the current scenario where the SEC pushes against companies in the space. Last week, the agency sued both Coinbase and Binance, and the fallout from these actions has spilled over to other companies that have signaled their intention to set up shop in other, friendlier jurisdictions.

Bitcoin biggest holders

According to CNN, BlackRock and Fidelity are among MicroStrategy’s largest shareholders. Both firms have been increasing their stake in the company in 2023. Recall that MicroStrategy is one of the companies that owns extensive Bitcoin holdings. The company, founded by Michael Saylor, has been adding cryptocurrency to its balance sheet consistently in recent times, making its shares an indirect investment vehicle to have exposure to Bitcoin.

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