Key Points
- Bitcoin dominance surged to 59.75%, as Ethereum’s ETH/BTC ratio dropped sharply.
- BTC enjoys institutional inflows, with $997.7M moving into ETFs for a third week.
- Tether’s USDT briefly lost its peg after news of a U.S. investigation.
- Short-term BTC holders eye profits, staying confident despite market dips.
Bitcoin dominance surged this week to 59.75%, highlighting Bitcoin’s strength as it outpaced altcoins like Ethereum. This growth in dominance places Bitcoin at a critical advantage, reshaping market sentiment in its favor.
Ethereum, meanwhile, is grappling with significant challenges, particularly in the ETH/BTC trading pair, which fell sharply below a key support level to hit a new low. As Bitcoin dominance rises, it puts increasing pressure on the rest of the crypto market, with many altcoins losing ground.
Institutional investors have shown strong interest in Bitcoin, with $997.7 million flowing into Bitcoin ETFs over three consecutive weeks. This shift is pushing Bitcoin higher, bolstering its position while posing a test for Ethereum and other major altcoins.
The ETH/BTC pair dropped by 5.85%, breaking down from the 0.03850 level and ultimately finding a new low at 0.03625.
Bitcoin dominance hits 59.75% as ETH/BTC slips below key support https://t.co/Kht8Bx8t78
— Los Hermanos Kruptos (@LosKruptos) October 27, 2024
Bitcoin’s Market Dominance and Institutional Backing
The increase in Bitcoin dominance is largely driven by institutional investments, with Bitcoin continuing to attract substantial capital.
Last week, Bitcoin ETFs received nearly $1 billion in inflows, marking a positive sentiment among institutional investors as they seek refuge in BTC amid economic uncertainties. This was the third consecutive week of inflows, signaling confidence in Bitcoin’s long-term value.
The strength of Bitcoin dominance impacts the crypto landscape, especially altcoins, which often rely on Bitcoin’s market performance to maintain their value.
As Bitcoin’s dominance rises, investors tend to shift from riskier assets into BTC, seeking stability. The market, currently centered on Bitcoin’s momentum, leaves many altcoins like Ethereum under pressure to keep pace.
Amid this, Bitcoin attempted to reach $69,500, its highest since July, but retraced to around $65,000, finding solid support. This level serves as a key price point, giving the asset room for consolidation.
ETH/BTC Struggles and Tether’s Impact
Ethereum’s ETH/BTC pair continued its downward trend as it fell 5.85% in a single week, breaking below its established support level. The drop places ETH in a challenging position relative to Bitcoin, especially as Bitcoin’s rising dominance attracts more investor attention.
The ETH/BTC slide coincided with news of a potential U.S. investigation into Tether (USDT), the largest stablecoin, which briefly lost its dollar peg, unsettling the crypto market.
The investigation news caused USDT to fall to 0.9965 before recovering to 0.9980. Tether’s CEO dismissed the investigation as baseless, but the market remained uneasy. Since Tether has a major role in crypto liquidity, the news impacted both Bitcoin and Ethereum’s price performance.
Beyond Tether’s news, geopolitical tensions in the Middle East added to market volatility, with recent conflicts between Israel and Iran affecting global markets.
As a result, both U.S. stocks and crypto assets faced pressure, with the Dow Jones and S&P 500 experiencing slight declines of 0.61% and 0.03%, respectively. Bitcoin briefly dropped to $65,500 amid the uncertainty, but its dominance remained strong.
Short-Term Bitcoin Holders Stay Confident
Amid the volatility, short-term Bitcoin holders (STH) demonstrated strong confidence. Metrics showed that these holders, who typically keep BTC for less than 155 days, are maintaining their positions.
On-chain data revealed that only 2.3% of short-term holders are in a loss position, with most holding out for potential price gains. This pattern suggests that STH are confident in Bitcoin’s upward trajectory, selling only when profits are attainable.
Short-term Bitcoin holders have historically used slight gains as opportunities to accumulate more, especially when Bitcoin dominance is on the rise.
With STH profit-taking near its peak level, this trend indicates a positive outlook for BTC as it consolidates before the next move up.
