Bitcoin Dominance Hits Two-and-a-Half Year High After Latest Rally

Bitcoin was back on the offensive Tuesday, rebounding sharply over the 24-hour trading cycle and driving its dominance rate north of 70% for the first time in almost two-and-a-half years. The rally, which appears to be technical in nature, suggests bitcoin has achieved newfound support at the all-important $10,000 level.

BTC/USD Update

The bitcoin price notched a session high of $10,506.19 on Bitstamp, its best level in almost two weeks. At the time of writing, BTC/USD was trading at $10,344, little changed from the previous session.

Bitcoin (BTC/USD) climbs above the 30-day exponential moving average. Further gains eyed? | Source: TradingView.

Compared with 24 hours ago, bitcoin is up 5.6%, according to CoinMarketCap.

With the rally, bitcoin has returned above the 30-day exponential moving average (EMA), a level that had provided strong comfort during the monthslong bull market. Underlying momentum has also picked up sharply, with the relative strength index (RSI) returning above 50.

On Tuesday, spot markets processed nearly $1.3 billion worth of bitcoin trades, according to Bitwise, which collects data from ten verified exchanges. Volumes on verified exchanges plunged to around $300 million over the weekend. Binance continues to be the largest single market for bitcoin spot trades; Kraken and Coinbase are a distant second and third, respectively.

Bitcoin Dominance Soars

The latest push higher gives bitcoin a market capitalization of $185.3 billion, which represents 70.2% of the overall cryptocurrency market. The so-called bitcoin dominance rate hasn’t been this high since March 2017, according to CoinMarketCap.

Bitcoin’s dominance rate approached 70% in early August before declining slightly. Over the last eight months, bitcoin’s share of the overall cryptocurrency market has risen by nearly 20 percentage points.

Bitcoin’s share of the overall cryptocurrency market continues to surge. | Source: CoinMarketCap.

A Hacked recently reported, bitcoin’s growing dominance and Ethereum’s declining reservation demand have put altcoins and tokens on dangerous ground. The erosion of the altcoin market is perhaps best expressed in the Ethereum/bitcoin exchange rate, which has plunged by around 45% in just three months.

Bitcoin maximalism also appears to be growing, at least among institutional investors. The vast majority of the funds managed by Grayscale are allocated to bitcoin. Earlier this year, the investment firm declared the “return of the bitcoin maximalist” after reporting that 88% of its inflows were into the Grayscale Bitcoin Trust.

As bitcoin’s dominance continues to grow, altcoins will find it more difficult to escape its gravitational pull. At this stage, the trend toward bitcoin maximalism appears to be increasing. The ETH/BTC exchange rate suggests demand for altcoins is lower than it has been since the early days of the 2017 bull market.

Read: This Statistic Proves Bitcoin Is Not a Bubble

Disclaimer: The author owns Bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock. Chart via TradingView.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi