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September 19, 2023

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Bitcoin's Crypto Market Dominance Rises to 50% and Could Go Higher

Over the past month, Bitcoin (BTC) has remained relatively stable, with its current price of $26,700 showing little change from 30 days ago. However, during this period, its market dominance has been steadily increasing, amplifying concerns for the broader cryptocurrency sector.

The Bitcoin market dominance rate, which measures the proportion of the total digital asset market held by the largest cryptocurrency, reached 50.2% on Monday. This marks its highest level in a month, nearing the peak of 52% seen at the end of June, a level not witnessed in 26 months.

To provide some context, Bitcoin's market dominance had been oscillating within a range of 39% to 49% for over two years. It broke out of this range in June following the filing by asset manager BlackRock for a spot BTC exchange-traded fund. This move had sparked optimism about substantial capital inflows into Bitcoin.

Markus Thielen, the head of research at crypto services provider Matrixport, elaborated during an interview with CoinDeskTV that Bitcoin is benefiting from increased "potential buying pressure" resulting from the ETF listings. Meanwhile, alternative cryptocurrencies, often referred to as altcoins, face growing risks. Thielen highlighted issues such as token sales by the beleaguered exchange FTX, declining revenues within the Ethereum protocol, and upcoming token unlocks that could enable venture capital investors to offload their tokens, all contributing to these risks in the altcoin market.

Thielen added, "BTC reached its peak for the year in July, whereas ETH peaked in April. All these ETF announcements haven't really favored altcoins, not even Ethereum."

Macro analyst Noelle Acheson pointed out that Bitcoin is likely to benefit from recent regulatory proposals by the New York Department of Financial Services (NYFDS). These proposals include stricter rules for listing cryptocurrencies on exchanges, along with the favorable categorization of BTC as a digital asset that license holders can list or custody without encountering additional regulatory obstacles.

In a newsletter, Acheson predicted, "The immediate impact on crypto markets could lead to further capital flowing into BTC, solidifying its status as the 'safe' crypto asset."

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