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Shifting investor preference impacts crypto landscape
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This week, we explore Bitcoin’s growing dominance in the crypto market. We examine the key factors driving investor preference towards Bitcoin, including the impact of Bitcoin ETFs and market stability. We highlight the challenges faced by Ether, such as its declining ETH/BTC ratio and lower profit percentage, while also discussing the rise of stablecoins and their expanding role in the market.
Network Fees — Sum of total fees spent to use a particular blockchain. This tracks the willingness to spend and demand to use Bitcoin or Ether
- Bitcoin’s weekly fees have finally begun to rise after two consecutive weeks of continuous decline, hitting their lowest point in over a year and a half.
Exchanges Netflows — The net amount of inflows minus outflows of a specific crypto-asset going in/out of centralized exchanges
- Ahead of the FED announcement this week, both BTC and ETH experienced inflows into exchanges.
Bitcoin’s Dominance in 2024
Bitcoin is trading near $63k, up 4.5% in the last 24 hours following the Federal Reserve’s 50 basis point rate cut. Skepticism persists despite the rate cut, leaving sentiment mixed about the crypto rally’s sustainability. ETH continues to underperform, trading at a 40-month low against Bitcoin in 2024. This shift in preference toward Bitcoin has been fueled by the introduction of Bitcoin ETFs, which saw substantial inflows, while Ether ETFs experienced net outflows. Some traders suggest this trend reflects a broader market favoring Bitcoin’s perceived stability over Ether’s higher-risk, high-yield potential.
Source: IntoTheBlock’s Stablecoins Insights Perspective Dashboard
73% market cap dominance — When combined with ETH and Stablecoins BTC’s dominance has steadily risen, up 6% year-to-date.
- The ETH/BTC ratio has dropped below 0.04, its lowest since April 2021, reflecting diminishing demand for Ether as investors shift their preference toward Bitcoin.
- ETH is up by 0.2% from its January 1 level, while Bitcoin has risen approximately 43% in 2024.
- Moreover, the combined stablecoin market cap has increased its market share at Ethereum’s expense, growing from 7% to 10% of the total market capitalization shared among BTC, ETH, and stablecoins.
Source: IntoTheBlock’s Stablecoins Insights Perspective Dashboard
$118 Billion — This marks an all-time high for USDT’s market capitalization, which has been the main driver for stablecoins to gain market share from ETH over the past six months.
- Following USDT, the second-largest stablecoin, USDC, has increased its market cap from $24 billion to $35 billion year-to-date, further contributing to the overall growth of the stablecoin market cap.
- The stablecoin market cap has steadily grown, even amid the sideways market seen in recent months, signaling rising investor confidence in the crypto space.
- As traditional institutions increasingly adopt blockchain technology, stablecoins have emerged as a vital bridge connecting the two worlds.
Source: IntoTheBlock’s Ethereum Indicators
63% of ETH holders are in profit — marking the lowest percentage of profitable holders so far this year.
- Although only 63% of addresses are currently in profit, 82% of the total ETH volume acquired remains profitable. This highlights that 58.27 million out of 120 million ETH were purchased within the $1,900 to $2,350 range.
- Moreover, most stablecoins are issued on the Ethereum blockchain, where more than 60% of all DeFi assets are locked.
- Finally, Ethereum leads the way with the most active developers and the largest user base.
Bitcoin has maintained its dominance in 2024, driven by the introduction of Bitcoin ETFs and a shift in investor preference towards its perceived stability over Ether. ETH has struggled, with its lowest ETH/BTC ratio since 2021 and a smaller percentage of holders in profit compared to Bitcoin. Meanwhile, stablecoins, led by USDT and USDC, have steadily gained market share, further shaping the evolving dynamics within the crypto market.
Bitcoin’s Dominance in 2024 was originally published in IntoTheBlock on Medium, where people are continuing the conversation by highlighting and responding to this story.
Disclaimer
The views and opinions expressed in this article are solely those of the authors and do not reflect the views of Bitcoin Insider. Every investment and trading move involves risk - this is especially true for cryptocurrencies given their volatility. We strongly advise our readers to conduct their own research when making a decision.