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Bitcoin (BTC) has surged in dominance within the cryptocurrency market, exceeding 49% and marking its highest level in over two years.
Based on data from CoinGecko, Bitcoin’s current dominance stands at 49.58%, nearly three times greater than Ethereum (ETH), the second-largest cryptocurrency by market capitalization, which currently holds approximately 16.7% of the market share.
This consistent rise in dominance, which started around 38% at the beginning of the year, indicates a substantial increase in Bitcoin’s market influence.
The increase in Bitcoin’s dominance can largely be attributed to its year-long bull run, with the cryptocurrency’s price surging by 81% since the start of 2023.
This remarkable performance has further solidified Bitcoin’s position as a dominant force in the cryptocurrency market.
Numerous factors may have contributed to this surge.
First and foremost, concerns regarding inflation, geopolitical uncertainties, and the growing polarization within the U.S. government have encouraged investors to seek refuge in safe-haven assets, reducing their exposure to risks.
Bitcoin, with its decentralized nature and limited supply, has emerged as an attractive choice for those seeking stability in times of uncertainty.
Moreover, the potential approval of a Bitcoin exchange-traded fund (ETF) has boosted confidence in the cryptocurrency.
A Bitcoin ETF approval could provide mainstream investors with a regulated and accessible avenue for investing in Bitcoin, potentially attracting a significant influx of capital into the market.
Bitcoin Could Reach $42,000 with the Approval of a Spot ETF
As reported, Matrixport, a crypto financial services platform, has forecasted a substantial Bitcoin rally if a spot ETF becomes available.
Drawing a parallel to precious metals ETFs with a market capitalization of around $120 billion, Matrixport suggests that assuming 10-20% of precious metal ETF investors diversify into a Bitcoin ETF as a hedge against currency devaluation and inflation, we could anticipate an inflow of $12 to $24 billion into the Bitcoin ETF.
The report states, “If Tether’s market cap increases by $24 billion, serving as a proxy for potential ETF inflows, Bitcoin’s price could reach $42,000, representing a conservative estimate.”
Furthermore, with a larger influx of $50 billion, a result of a 1% allocation recommendation by Registered Investment Advisers (RIAs), Bitcoin has the potential to rally up to $56,000, as suggested by the firm.
Recently, there has been growing optimism surrounding the launch of a spot Bitcoin ETF.
Just last week, Coinbase’s Chief Legal Officer, Paul Grewal, expressed optimism that the Securities and Exchange Commission (SEC) will soon approve a spot Bitcoin ETF.
“I’m quite hopeful that these [ETF] applications will be granted, if only because they should be granted under the law.”
He pointed to a recent court ruling that went against the SEC, affirming that the regulator lacked grounds to reject Grayscale’s request to transform its GBTC Bitcoin fund into an ETF.
