Bitcoin dominance hit a new cycle high despite the price improvement, as investors shift to altcoins, which were stronger than the American job growth and the Hawkish trend of the Federal Reserve.
As MatrixportThe dominance of bitcoin (BTC) has increased in a new cycle, beyond 61%. Matrixport attributed it to two factors: a strong-to-intake US job reports as well as the fast growing stance of the Federal Reserve. When the growth of the job exceeds expectations, it suggests that the economy is performing well. This often translates delays in high interest rates or rate cuts, which reduces liquidity in financial markets. High interest rates then borrow more expensive, encouraging investors to transfer from Alt coins to safe property (hence, despite the price improvement in bitcoin dominance). According to the Matrixport Chart, the BTC dominance was 60.3 % on 5 November, but after the US elections in November it fell to 53.9 on December 9.
This change is also reflected in the overall crypto market cap trend. According to the Matrixport chart, the total market cap saw an increase in the November Ultcoin rally, but the dominance of bitcoin began to decline. In early March, Crypto Marketcap crashed significantly from its post -$ 3.8 trillion’s post in December (when BTC dominated around 53%) up to $ 2.9 trillion. It represents a drop of about $ 900 billion, which exposes a significant contraction in the Crypto market liquidity.
Despite this, bitcoin remained relatively flexible compared to altcoins. To keep it in perspective, the price of bitcoin declined by 24% of its all -time high of $ 109K achieved in January. However, the Etharium (Ath) fell until $ 1895 in the last month, while Solana (Sol) declined by 39% in the same period.
Regardless of its relative flexibility, however, the bitcoin price improvement aligns with the decreasing market cap, suggests that liquidity is weighing at its price. Due to the stance of the Federal Reserve, matrixport analysts believe that it will be difficult to maintain significant value growth for bitcoins, which is purely based on increased liquidity. The possibility of any further profit will take “more patience”, which means that investors will have to wait for a long time and the chances of growth will be gradually gradually. The actions of the fed can retaliate positive effects of increased liquidity.
