The crypto bloodbath continues as Bitcoin falls 13%, albeit to a lesser degree than what was experienced last week. Due to this, various migration patterns have been recorded in crypto investors as they search for the best safe haven. The first had been the flight to stablecoins to hedge against endless losses. However, the tide has turned once again, as investors now seem to be turning back to Bitcoin, causing dominance to rise.
Bitcoin resets dominance
The drop has affected all cryptocurrencies in the market, but the data shows that some have had it worse than others. Altcoins, especially small-cap altcoins, have posted the biggest losses as expected. However, Bitcoin is not spared from this.
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The largest cryptocurrency by market cap is now down 13% in price, but this has not stopped it from re-establishing its dominance over the market, hitting a new six-month high. He now has 44.4% dominance and hasn’t been that high since October 2021.
BTC dominance returns | Source: Arcane Research
Mainly, the decline in investor sentiment towards the negative has been one of the main factors that led investors to Bitcoin. With altcoins taking a beating in the market, investors are looking to BTC, which they believe is a safer bet compared to smaller-cap coins.
The result of this has been that money from altcoins was transferred to bitcoin, leaving altcoins behind. As such, bitcoin has only posted a 23% drop since the month of May began, the lowest drop of any index.
Others have recorded higher falls. The large-cap index posted a 28% loss over the last two weeks, the mid-cap index down 31% over the same time period, while the small-cap index was hit the hardest with a 37% drop. .
Stablecoins take a hit
The entire UST debacle has started to unravel, but the effects of the fall of the third largest stablecoin continue to affect its counterpart. After the UST decoupling, some of that low sentiment flowed into the largest stablecoin, USDT, which had lost 10% of its market cap.
BTC dominance reaches six-month high | Source: Market Cap BTC Dominance on TradingView.com
However, one of the reasons for this had also been the challenge of stablecoin parity as the price of bitcoin declined. There is also speculation that some of the funds that left USDT had flowed into another stablecoin, USDC, which happens to be the second largest stablecoin.
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However, both stablecoins have continued to hold their peg to the dollar. This leaves UST as the only stablecoin to lose its peg.
Featured image from Yahoo Finance, charts from Arcane Research and TradingView.com