Bitcoin’s dominance, which measures the cryptocurrency’s share in the broader market, has experienced a sharp increase amid the ongoing instability in the U.S. banking sector. Since early March, the dominance rate has surged from 42% to nearly 49%, a 22-month high.
Over the same period, the SPDR S&P regional banking exchange-traded fund (ETF), which aims to replicate the performance of an index derived from regional U.S. banks, has plummeted by 35%.
The banking crisis worsened in March as three U.S. banks – Silicon Valley Bank (SVB), Signature Bank (SBNY), and Silvergate Bank (SI) – collapsed, raising fears of a systemic meltdown. First Republic Bank (FRCB) joined the list of failed banks, while PacWest Bancorp (PACW), a lender based in Los Angeles, saw its shares plunge by more than 60% on Wednesday.
Nevertheless, U.S. Federal Reserve Chairman Jerome Powell has maintained that the banking sector is "sound and resilient." The banking sector’s instability and banking stocks’ drop is driving Bitcoin’s market share higher, reflecting its growing appeal as a safeguard against the U.S. dollar’s erosion, comparable to gold and oil, Lewis Harland, portfolio manager at Decentral Park Capital, said.
With the dominance rate currently standing at 48.5%, having recently peaked at 48.9%, Harland believes that a breakout would signify continued BTC outperformance as BTC’s dominance is “looking to break its three-year oscillation pattern.”
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- Source: https://www.cryptocompare.com/email-updates/daily/2023/may/05/
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