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Market Review 10/11: Bitcoin dominance on the rise

The price of Bitcoin has risen by more than $5,000 since last week. At the same time, Bitcoin’s dominance is growing. This means the most altcoins are down compared to Bitcoin. The DeFi sector has broken a new record in TVL.

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Bitcoin price surpassed the $56,000 mark

The price of Bitcoin has risen tremendously since the beginning of October. Last week, the price had just passed the $50,000 mark. At the time of writing the price is already at $56,500. It’s been another excellent week for Bitcoin investors.

Below you can see the daily candles from the last six months. The blue line represents a 50-day moving average and the purple line represents a 200-day moving average.

btckurssi20211011

It is a very good sign that the price of Bitcoin has risen well above the 50- and 200-day averages.

Last year, the price of Bitcoin also rose above the 50-day average in October. This led to a fantastic bull run, which saw Bitcoin move from $10,000 to $60,000 in a couple of months. Hopefully, history will repeat itself.

We believe that the price of Bitcoin could reach $150,000 by the end of this halving cycle.

There is no single reason for Bitcoin’s positive price development. The final quarter of the year has traditionally been good for Bitcoin. There might be also new institutions purchasing bitcoin we just don’t know of yet.

Market dynamics also support Bitcoin’s price development.

 

A historically high number of bitcoins are held by long-term holders (LTH). These entities do not sell their holdings easily. They don’t care about small dips or minor uptrends. LTHs want to cash in big time.

At the moment, it is difficult to see anything negative in Bitcoin’s price development.

Bitcoin’s dominance is on the rise

There haven’t been any clear trends in Bitcoin’s dominance over the past few weeks. The market share has fluctuated between 40% and 43%.

Below you can see the CRYPTOCAP index from TradingView.

cryptocap20211011

Now we can see a clear trend in Bitcoin’s dominance. At the time of writing, Bitcoin’s market share is 44.99%. Last week the corresponding figure was 42.85%. In other words, there has been a rise of ~two percentage points.

The positive development of Bitcoin dominance can be seen in the overall market. We have witnessed several days where the entire altcoin market has been red while Bitcoin has moved up.

In recent years, the biggest price rallies have been triggered by Bitcoin. Altcoin prices have taken off after Bitcoin’s parabolic growth has stagnated. At the moment, Bitcoin seems to be pulling the entire market into a new upturn.

Many investors believe that Bitcoin’s dominance will grow further, as money is flowing from altcoins to Bitcoin.

Altcoins are in the negative territory

As Bitcoin increases its market share, altcoins are suffering an equal amount. All the biggest altcoins are badly down when compared to Bitcoin. Dogecoin and Polkadot have performed best. Those coins are down less than ten percent when compared to Bitcoin.

Below is a screenshot from Coinmarketcap.com. The altcoin price development is compared here to Bitcoin, not vs. the U.S. dollar.

altit20211011

Popular altcoins Solana and Terra have suffered badly. The price of these coins has dropped by more than 25 percent in one week.

There are only a few exceptions in the TOP-100 list. SHIBA INU has performed well. The price of the SHIB token is on the rise. Compared to Bitcoin, SHIB is on the plus side, as well as the STX-token.

The smart contract platform Fantom has also performed well. Last week, Fantom even reached its new all-time high. We believe that many Solana and Terra investors have been speculating with Fantom recently.

The DeFi sector reached yet another record

The DeFi market has been on the rise for several weeks. In our previous market review, the combined TVL (total value locked) of the DeFi sector was $199.53 billion. At the time of writing, the TVL is already at $207.44 billion. This is a new all-time high.

The peak of the previous DeFi boom took place in May 2021. TVL reached $165 billion back then. Now, there is 30% more liquidity locked in the market.

defi20211011

The DeFi market is thriving despite the growth of Bitcoin dominance. This is because TVL consists mostly of stablecoins, so the poor performance of altcoins doesn’t have a direct impact.

At the protocol level, the situation looks like this:

defiprotocols20211011

Aave and Curve have changed places again, as they’ve done many times in recent weeks. In our last market review, Curve lagged behind by about half a billion dollars. Now Aave has fallen to second place.

Compound, which saw a downgrade recently due to a bug in its system, has not yet recovered from this blow. MakerDAO has kept third place on the list.

Anyswap is the new addition.

anyswap

Anyswap is an advanced DEX that enables cross-chain transfers. For example, a user can transfer USDC tokens from Ethereum’s network to Polygon’s network with a single trade. There is certainly a demand for this among users.

Anyswap’s TVL grew as much as 276 percent last week. At the same time, the price of its ANY-token has risen over 50 percent. Is this possibly the next DeFi moon shot?

At the blockchain level, the situation is as follows:

defichains20211011

There have been no significant changes. Ethereum and BSC have both increased their total liquidity. Solana and Terra have lost ground.

The biggest mover is Fantom. Its TVL has grown from $1.55 billion to nearly $6 billion in one week! The growth comes almost entirely from the Anyswap protocol.

Polygon has fallen two places. The downward trend continues even if Polygon has more Dapps than Solana, Terra, and Avalanche combined.

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