Bitcoin’s (BTC) dominance rate rises to 22-month highs of 49% after US banking crisis
Bitcoin’s (BTC) dominance rate, which measures the cryptocurrency’s share of the broader market, has risen sharply since the start of the ongoing instability in the US banking sector nearly two months ago.
Since early March, its dominance rate has risen from 42% to 22-month highs near 49%, indicating the top cryptocurrency’s outperformance relative to the broader market, according to data tracked by charting platform TradingView.
The SPDR S&P Regional Banking ETF, which attempts to replicate the performance of an index derived from the regional US banks, is down 35% over the same time frame.
In March, three US banks – Silicon Valley Bank (SVB), Signature Bank (SBNY) and Silvergate Bank (SI) failed, sparking fears of a full-blown banking crisis. First Republic Bank ( FRCB ) became the latest victim of the banking crisis, and to complicate matters, shares of Los Angeles-based lender PacWest Bancorp ( PACW ) fell more than 60% on Wednesday.
However, Federal Reserve Chairman Jerome Powell said the banking sector is “healthy and resilient”.
According to Decentral Park Capital portfolio manager Lewis Harland, bitcoin’s growing market dominance amid banking sector instability and the fall in bank stocks is evidence of the cryptocurrency’s strengthening appeal as anti-US dollars play or bet on dollar weakness just like gold and oil.
“You’re seeing better performance of BTC within the crypto market as regional bank share prices collapse. This signals that BTC is a high-quality anti-dollar liquid play for investors as the crisis unfolds,” Harland told CoinDesk.
Expectations for renewed liquidity easing from the Federal Reserve (Fed) have strengthened amid the banking crisis, signaling dollar weakness ahead. On Wednesday, the Fed raised interest rates by 25 basis points, opening the door to a potential pause in June.
BTC’s dominance rate is now probing the upper end of its multi-year range. A breakout would mean continued BTC outperformance, according to Harland.
“Bitcoin dominance is looking to break the 3-year oscillation pattern,” Harland said. “A break of 50% is likely to signal a new market regime of prolonged BTC outperformance in the market.”
Bitcoin rallied after regulators Silicon Valley Bank on March 10 and has risen 48% to $29,100 since then, CoinDesk data shows. The run higher is reminiscent of the positive performance during the 2013 Cyprus banking crisis.
