Bitcoin dominance nears 60%, indicating a market shift as exchange reserves drop and open interest hits record highs.
Bitcoin dominance has reached new cycle highs, reflecting shifts in the crypto market. Notably, market data confirms that BTC dominance, which had dropped significantly from above 58% in May 2021 to below 40%, has seen a substantial recovery over the past two years.
By October 2024, Bitcoin dominance has climbed back above 58%. Notably, this increase comes at a time when various factors, such as rising open interest and reduced exchange reserves, are influencing Bitcoin’s performance.
Steady Rebound in Bitcoin Dominance
The period from May 2021 through late 2022 marked a steep decline in BTC dominance as altcoins gained market share. However, by early 2023, Bitcoin began to recover, experiencing a steady and persistent uptrend. The moving averages also point to positive momentum, with Bitcoin dominance consistently trading above these indicators since late 2022.
As dominance approaches the 60% mark, market analysts have weighed in. Crypto analyst Miles Deutscher noted that while some may interpret this trend as bearish for altcoins, it is actually beneficial. According to Deutscher, a strong Bitcoin is essential for setting the stage for an eventual altcoin rally.
He explains that the increase in BTC dominance, coupled with its price rise, represents the first phase of this market movement. He believes this is a healthy sign for the overall cryptocurrency market, as Bitcoin’s strength often precedes a broader market expansion, ultimately benefiting altcoins.
Declining Exchange Reserves
Simultaneously, another factor affecting Bitcoin’s market performance has been the withdrawal of BTC from exchanges. Over the past eight months, over 400,000 BTC—worth $24 billion—has been withdrawn, according to market analyses.
Over 400,000 $BTC, roughly $24 billion, have been withdrawn from exchanges in the past 8 months! pic.twitter.com/FVPkwP5nl4
— Ali (@ali_charts) October 15, 2024
Rising Open Interest
In addition to these developments, Bitcoin’s open interest across exchanges has reached record highs, suggesting increased market activity. By mid-October, open interest had soared to $19.75 billion. Notably, spikes in open interest have often preceded significant price movements, and with this metric now at an all-time high, further volatility could kick in.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
