Bitcoin’s Dominance Eases amid Widespread Crypto rally
Bitcoin’s grip on the multibillion cryptocurrency sector has eased significantly as investors and traders take interest in other smaller coins. Immediate data indicates that speculation in the sector has spread beyond the flagship cryptocurrency. The largest 100 digital assets are up 14%, while the 30 mid-tier tokens are up 16%, exceeding the 4% gain of Bitcoin in November.
Widespread Crypto Rally
The widespread rally has seen Bitcoin’s share of the $1.38 trillion crypto market drop to 49% from 51.5% in October. The drop hints at a significant uptick in risk appetite in the market as investors turn their attention to other little-known coins trading at much more depressed valuations than Bitcoin.
Ripple is one of the smaller coins that has been one of the strongest performers for the month. The crypto has rallied by more than 14%, benefiting from Ripple Labs’ partial victory over the US Securities and Exchange Commission over whether XRP should be treated as a security under the agency’s purview. The crypto rally is also spreading beyond normal altcoins to decentralized finance, one of the fastest-growing segments in the market.
The fact that the rally is broader is also a good sign and most sustainable on any price action experienced for the better part of the year. According to Digital Asset Capital Management co-founder Richard Gavin, the widespread rally in an environment that’s relatively thin in regards to liquidity signals the maturity of the broader sector.
Sentiments in the broader cryptocurrency sector have improved in recent months on expectations of listing a Bitcoin exchange-traded fund. Such a fund is expected to attract more institutional investors into the nascent segment, affirming cryptocurrencies’ push for adoption in the mainstream sector. While Bitcoin has rallied by more than 28% over the past month, a sense of optimism in the broader sector has also seen other cryptocurrencies post double-digit gains.
Interest Rate Pause
Optimism that the US Federal Reserve has reached its peak on interest rate hikes is another factor that’s helping attract more investors into the crypto sector. Investors had fled the risky asset early in the year, opting to focus their attention on instruments that benefit from higher yields, such as bonds and treasuries.
With the Fed unlikely to hike interest rates, there is an expectation that dollar strength will ease significantly, something that could be of great benefit to cryptocurrencies. Bitcoin is already up by more than 100% for the year, bouncing back on coming under pressure last year as investors shunned risky assets amid soaring inflation. The Fed hiking interest rates at the fastest pace to tame runaway inflation resulted in dollar strength, all but piling pressure on Bitcoin and other cryptocurrencies.
Unlike in the past when Bitcoin was highly volatile, its move to the upside has been steady in recent months. The rally had affirmed constant buying in the market, with the focus also being on other cryptocurrencies compared to the past when Bitcoin was the center of attention. The more widespread shift in investor sentiment has helped tame the heightened volatility that was a concern in the past.