“Bitcoin dominance is only increasing”

Bitcoin is increasing in dominance even as BTC is set to experience its first monthly loss since August. Bitcoin’s dominance rate has risen past a key level, signaling further gains, according to Fairlead Strategies.

Bitcoin dominanter

Bitcoin (BTC) is set to end a seven-month winning streak. Nevertheless, the largest coin by market value is increasing in the crypto market, according to this analyst.

At the time of writing, bitcoin is trading at $63,200, which represents a monthly loss of 11%. That’s the first monthly loss since August 2023. The CoinDesk 20 Index, a benchmark for the most liquid digital assets, was trading nearly 20% lower for the month at 2,185 points.

A range of factors such as the declining likelihood of Fed rate cuts, reduced demand for US-based spot bitcoin exchange-traded funds (ETFs) and general risk aversion in the financial markets have taken the wind out of bitcoin’s sails. Meanwhile, a continued expansion of prominent stablecoins has been a supporting factor.

Analysts are now closely watching the U.S. Treasury Department’s quarterly financing statement next Wednesday. According to Singapore’s QCP Capital, higher issuance of short-term bonds could lead to more liquidity in the market. And that is beneficial for ‘risky’ assets such as bitcoin.

“The upcoming Quarterly Funding Announcement (QRA) on May 1 could also lead to higher issuance of short-term US bonds. This will reduce the RRP, which currently stands at USD 400 billion, and also increase liquidity,” QCP said in a market note.

The U.S. Treasury Department said Monday it plans to borrow more in the second quarter from April to June. Higher than expected borrowing needs mean more bond supply, higher yields or risk-free rates and less reason to invest in risky assets.

The department also said it expects to maintain a balance of $850 billion in its Treasury General Account at the end of September, slightly above the expected $750 billion.

That 850bln planned TGA number for end of Sept ’24 has got to have the “Yellen will do whatever it takes to juice assets” crowd a little shaken right now.

— Bob Elliott (@BobEUnlimited) April 29, 2024

BTC is becoming more dominant

Bitcoin’s dominance rate, or share of the crypto market, recently rose to a three-year high of 57%, breaking out of a six-month consolidation pattern.

The breakthrough means that bitcoin is likely to continue to excel against alternative cryptocurrencies (altcoins) in the coming months. “The dominance rate recently had a breakout that favors bitcoin over altcoins in the medium term, corresponding to the weekly RRG [relatieve rotatiegrafiek] where most altcoins are pointing lower,” Fairlead Strategies said in a note to clients Monday.

“The index breakout marks a continuation of a long-term reversal phase, which has reversed many of altcoins’ gains from early 2021,” the analysts said.