ETFs fuel Bitcoin’s resurgence, reclaiming 2021 peak in dominance
Bitcoin’s dominance in the cryptocurrency market has reached its highest level in three years, driven primarily by strong interest in U.S. ETFs. According to CoinMarketCap, Bitcoin accounted for nearly 55% of the $2.4 trillion market for virtual currencies, a level not seen since April 2021. The top coins following Bitcoin in terms of market share are Ether, Tether, Binance’s BNB, and Solana.
The recent launch of U.S. spot ETFs by companies like BlackRock and Fidelity Investments has been incredibly successful, attracting nearly $56 billion in assets. This influx of investment briefly pushed Bitcoin to a record high of $73,798 in mid-March. Although the price of Bitcoin has since fallen by about 6%, smaller digital assets have experienced a more significant decline of over 30%. This drop has been influenced by the diminishing prospects of a looser U.S. monetary policy, which typically encourages speculative investments.
“Allocations to the U.S. ETFs by institutional investors have resulted in Bitcoin performing very strongly compared to the rest of the market,” said Benjamin Celermajer, director at digital-asset investment manager Magnet Capital.
In addition to the U.S. ETFs, the introduction of Hong Kong-listed ETFs for Bitcoin and Ether has also contributed to the rise in their values. Bitcoin has increased by 4.3% to $66,575, while Ether has risen by 6.2% to $3,260. This surge in value has also positively impacted other cryptocurrencies like Polygon, Cardano, and Dogecoin.
The market is also eagerly anticipating the upcoming halving event, scheduled for around April 20. This event is expected to cut the new supply of Bitcoin by half. While previous halvings have led to price increases, the impact of the upcoming event remains uncertain given Bitcoin’s recent peak performance.
