In a significant turn of events, Bitcoin has reclaimed its position of dominance in the cryptocurrency market, accounting for over 50% of the total market capitalization. This resurgence, which comes two years after the filing of the BlackRock Exchange Traded Fund (ETF), has profound implications for the global and South African cryptocurrency landscapes.
This is the first time since 2021, when China imposed a comprehensive ban on crypto mining and Tesla distanced itself from the asset, that Bitcoin’s dominance metric has risen above 50%. This resurgence is a testament to Bitcoin’s resilience and its enduring appeal among investors, including those in South Africa, where interest in cryptocurrencies is growing.
Bitcoin’s market dominance is a measure of its share in the total crypto market capitalization. On June 6, 2023, the dominance crossed the 50% mark and then settled slightly lower at 49.9%, according to data from TradingView. Currently, Bitcoin’s dominance is back above the 50% mark, hovering around 50.5%. This means that Bitcoin now accounts for half of the total $1.1 trillion market capitalization of the cryptocurrency market, with its own market capitalization standing at around $520 billion, as per data from Coingecko.
The surge in Bitcoin’s market dominance, which has increased by over 10% since November 27, 2022, is primarily driven by investors viewing Bitcoin as a safe haven for their investments. This sentiment has been fueled by the dramatic collapse of the Sam Bankman-Fried-led FTX exchange and growing regulatory scrutiny of altcoins in the United States.
For South African investors, this resurgence of Bitcoin could signal a shift in the crypto landscape. As Bitcoin’s dominance grows, it could potentially drive more institutional investors towards the asset, thereby increasing liquidity and stability in the South African crypto market.
While Bitcoin’s dominance metric has faced criticism for potentially under-representing Bitcoin’s actual market share by including stablecoins in its calculations, this year has seen the stablecoin markets struggle. The Securities and Exchange Commission ordered Paxos to shutter its BUSD in February, erasing billions from circulation.
Despite Bitcoin’s significant drop in 2022, Ethereum has managed to hold its position quite steady, with the ETH/BTC pair dropping to a ratio of only 0.05%. Currently, the combined value of Bitcoin and Ethereum makes up around 70% of the entire crypto market.
Industry experts, such as MicroStrategy co-founder Michael Saylor, believe that Bitcoin’s market dominance will continue to grow, potentially reaching 80% of the total market in the next few years. Saylor attributes this potential growth to increasing regulatory scrutiny and pressure from the United States Securities and Exchange Commission, which could cause a majority of other market assets to “go away.”
One of the major drivers of Bitcoin’s recent price and dominance surge is BlackRock’s announcement that it is filing for a Bitcoin Spot Exchange Traded Fund (ETF). This move has sparked optimism among investors, who are hopeful that the ETF may receive approval from the Securities and Exchange Commission.
For South Africa, where the crypto market is still in its nascent stages, the resurgence of Bitcoin and the potential approval of the BlackRock ETF could provide a significant boost to the market. As Bitcoin continues to dominate the global crypto landscape, South African investors could potentially benefit from increased market stability and the growing acceptance of cryptocurrencies as a legitimate asset class.