Bitcoins market share ratio reaches a threeyear high Whats the future trend

CoinWorld reported:
Author: Chandler, ForesightNews
On October 24th, market data showed that the price of Bitcoin fell below $66,000. Since October 21st, the upward trend of Bitcoin has shown signs of weakness, falling from a high of $69,500 to a low of $65,260. The trend of Ethereum has followed Bitcoin, sliding from a high of $2,770 to a low of $2,440. According to data from Coinglass, the market liquidation amount in the past 24 hours reached $279 million, with long liquidations reaching as high as $202 million.
Has the market reached another phase of its peak? Perhaps we can find some clues from on-chain data.
Bitcoin Dominance Index (BTC.D) is an index that represents the proportion of Bitcoin’s market value in the cryptocurrency market. Since around September 2022, BTC’s market dominance has been on the rise. According to Coinmarketcap data, BTC’s market dominance has recently approached 58%, an increase of over 8% for the year, reaching a high not seen since April 2021.
According to historical data, the early stages of a bull market are usually accompanied by an increase in Bitcoin’s market dominance, while the market enters the “Altcoin Season” phase, Bitcoin’s market dominance usually declines. At the same time, when Bitcoin’s market dominance reaches a high point, the market often enters a consolidation or correction phase. In theory, this is a manifestation of the market liquidity and investment sentiment reaching a critical point, as a natural result of Bitcoin attracting a large influx of funds and reaching a high price level, leading to profit-taking in the market.
The flow of funds into Bitcoin spot ETFs becomes crucial
It is worth noting that the recent increase in Bitcoin’s market dominance has been mainly driven by the influx of funds into Bitcoin spot ETFs, especially the participation of institutional investors. According to data disclosed by Ki Young Ju, CEO of CryptoQuant, institutional holdings in US Bitcoin spot ETFs account for about 20%. Asset management companies hold about 193,000 Bitcoins. Thanks to spot ETFs, 1,179 institutions have invested in Bitcoin this year.
From the data, from October 14th to October 21st, Bitcoin spot ETFs saw net inflows for 7 consecutive days, especially BlackRock’s ETF IBIT saw net inflows of over $1.5 billion, increasing its BTC holdings to 391,484 coins (worth about $26.45 billion). The price of Bitcoin also rose from $62,300 to over $69,000.
With the first net outflow of Bitcoin spot ETFs in 7 days on October 22nd, with a total net outflow of $79.09 million, the price trend of Bitcoin began to show stagnation and decline. This phenomenon can be interpreted as the market not breaking through important technical support levels and investors’ confidence in the short-term outlook declining. When institutional funds begin to decrease or flow out, a price decline follows. If Bitcoin fails to break through effectively, the price trend may face further consolidation and oscillation.
From another perspective, judging from the market’s reaction, the rise of Bitcoin has attracted a large amount of liquidity, which is particularly evident in the current market stage. At the same time, Bitcoin gradually absorbed the liquidity of other altcoins during the oscillation, further creating a pronounced “bloodsucking” effect. During the rise of Bitcoin, the prices of other cryptocurrencies often do not rise, leading to further liquidity skewing towards Bitcoin. If Bitcoin fails to break through key resistance levels, the market may experience a short-term correction, with liquidity further withdrawing from the altcoin market and price volatility intensifying. Typically, when Bitcoin reaches new highs, some liquidity may spill over into the altcoin market, leading to larger-scale price increases.
USDT market cap reaches a new high, USDT.D touches support
The total market value of stablecoins has increased its share by taking away Ethereum’s share, excluding other altcoins’ factors. Its proportion of the total market value of BTC, ETH, and stablecoins has increased from 7% in 2024 to 10%. According to data from DefiLlama, the total market value of stablecoins is currently reported at $172.778 billion, reaching a new high since May 2022.
Among them, USDT’s market cap has reached a historical high of $120 billion, accounting for 69.49% of the total market value of stablecoins. This has been the main driver of stablecoins taking market share from ETH over the past six months.
The bankruptcy of Silicon Valley Bank (SVB) in March 2023 was a turning point in the competition of stablecoins, resulting in a significant decline in the share of USDC and an increase in the supply of USDT. However, to some extent, the rise of USDT Dominance Index (USDT.D) is not a good thing for the market. USDT.D can serve as a barometer of market sentiment and effectively predict the price tops and bottoms of Bitcoin in different cycles.
From the chart below, it can be seen that in this year’s market, whenever USDT.D approaches or retests its long-term rising support line, Bitcoin often experiences local price peaks. This is because investors often transfer funds to stablecoins such as USDT to avoid risks during market fluctuations. Therefore, the rise of USDT.D usually indicates the withdrawal of market funds, which is where the recent price peak of Bitcoin is located.
From a medium to long-term perspective, the absolute realized profits and losses in the Bitcoin market are showing a significant downward trend. Since Bitcoin reached a historical high of $73,000 in March 2024, the rate at which new capital enters the market has significantly slowed down. According to data provided by Glassnode, the daily inflow of capital into the market is currently about $730 million, which, although not small, is a significant decrease compared to the peak of $2.97 billion in March.
This indicates a significant weakening of market demand. Although funds are still flowing into the market, the scale is not enough to drive a long-term stable rise or fall in Bitcoin prices but rather makes it more prone to sharp fluctuations under relatively small changes in capital. This lack of liquidity may continue to result in significant price volatility for Bitcoin in the short term, while the market as a whole lacks a clear direction, leading to a stronger wait-and-see sentiment among large investors.
Overall, Bitcoin is currently in a market situation characterized by high volatility and uncertainty, and the price trend in the past six months resembles a repeated fluctuation within the existing range. Without significant inflows or outflows of large-scale funds, it may be difficult for the price of Bitcoin to break the current oscillation pattern.
This market phenomenon is closely related to the fluctuation of market participants’ sentiment. Large investors have a stronger wait-and-see sentiment, and many institutional investors choose to wait for more clear market signals, such as further clarification of macroeconomic policies or adjustments to future monetary policies by the Federal Reserve, as well as the outcome of the upcoming U.S. presidential election. In the current stage, market sentiment is fragile, and any sudden changes in the macro environment can become a catalyst for market volatility.