Bitcoin’s price surpassed the $35,000 threshold for the first time since May 2022, potentially driven by the anticipated approval of a U.S. spot bitcoin ETF. Over $250 million in bitcoin short positions were liquidated in just three days, with Deutsche Digital Assets’ Head of Research, André Dragosch, attributing a short squeeze as a significant reason for this price surge. The Bitcoin Dominance Index, as presented by TradingView, reached a staggering 54.26% – a peak not seen since April 2021. Concurrently, a Kaiko report highlighted the rapid rate of crypto asset delistings from exchanges, marking the fastest in history.
Bitcoin Soars Amidst Market Uncertainty: A Deep Dive into Its Dominance
As the week unfolded, Bitcoin’s price notably exceeded the $35,000 mark. This surge has been linked to increased participation from small investors, suggesting promising prospects in the weeks ahead. However, the cryptocurrency’s success hasn’t mirrored across the broader market.
The buzz surrounding the potential green light for a spot bitcoin ETF significantly influenced trading activities, propelling the price beyond $30,000. Deutsche Digital Assets’ André Dragosch pinpointed a short squeeze as a major catalyst, which subsequently led to a massive $250 million liquidation of short positions in a mere three days, based on Coinglass data.
In tandem, the Bitcoin Dominance Index (BDI), which represents bitcoin’s proportion of the entire crypto market, achieved levels reminiscent of April 2021. Even though a thriving bitcoin often boosts the entire crypto sector, the broader market struggled to match Bitcoin’s momentum this week. This disparity isn’t a new phenomenon. The BDI has been on a gradual incline since the FTX crypto exchange debacle in November 2022. As of now, the BDI stands at an impressive 54.4%, marking its pinnacle since April 2021.
The Lone Titan: Why Bitcoin Thrives While Other Cryptos Struggle
Regrettably, prominent players from the last crypto bull market haven’t matched Bitcoin’s success over the past year. To illustrate, Ethereum’s native crypto asset, ether, witnessed a mere 14% growth over the year, starkly contrasting Bitcoin’s impressive 66% increase.
Further complicating the landscape, Bloomberg unveiled that crypto tokens are being removed from exchanges at an unprecedented rate, as per Kaiko’s data. A staggering 3,500 crypto token delistings are anticipated for 2023. Notably, Coinbase (COIN), currently under litigation by the U.S. Securities and Exchange Commission, has reportedly removed 80 trading pairs in just this month.
Delving into Bitcoin’s potential future trajectory, Dragosch noticed heightened bitcoin wallet activities among both minor and major investors. One particular metric caught his attention: the “median value of transfer volumes on the Bitcoin blockchain.” This could potentially hint at the price trend for Bitcoin. In Dragosch’s words, “Small-investor participation is a necessary condition for a sustained bull market in crypto assets.”