Bitcoin's market share reached a 3-month high amid altcoin underperformance. But geopolitical tensions could lead to wild fluctuations.
On-chain data shows that Bitcoin's market shares have crossed 50%, the highest level over the last three months. The price of the largest cryptocurrency hovers around $27,590, up almost 7% in a month.
The new war in the Middle East looks serious. There may be region-wide consequences. At the moment, cryptos are under pressure. However, with a US aircraft carrier strike group inbound, there is no telling how things will unfold.
BTC Dominance Strengthens
While Bitcoin's dominance strengthens, Ethereum and other altcoins have faced stumbles. The second-largest cryptocurrency has noted a drop in its market dominance, declining from 19% to around 17% in recent months. Other altcoins have been under massive selling pressure in recent days.
Ethereum has faced a barrage of criticism over its increased centralization following the Merge and Shanghai upgrades.
A recent study by JPMorgan found that while these upgrades led to a surge in staking activity, Ethereum has since become more centralized. The bank also expressed concerns over the decline in staking yields and the risk of rehypothecation.
CEO and founder of MN Trading, Michaël van de Poppe, said that altcoins' prices were heavily impacted by the selling pressure.
The crypto analyst suggested that if Bitcoin managed to rise back above the $28,000 price point, it could potentially lead to a price movement reaching between $35,000 to $40,000. He believed a bullish trend could be in play if Bitcoin's price surpassed $28,000.
According to Glassnode's Bitcoin Entity Balance Dominance, the dominance of smaller Bitcoin holders, "shrimps" and "crabs," now stand at 10.8% and 6.9%, respectively. The dominance of exchange entities is 11.8%.
However, it's noteworthy that the exchange balance power is going down while the smaller groups like crabs and shrimps are gaining more control. This shift in ownership dynamics indicates that smaller-scale investors are increasingly accumulating a larger share of the Bitcoin market compared to larger entities such as exchanges.
Bitcoin Volatility May Return
Rumors circulated earlier that October would be "Uptober" month, but the ongoing geopolitical disputes between Israel and Palestine could trigger price volatility. During crises, investors typically seek refuge in safer assets, such as gold, reducing interest in riskier assets like cryptocurrencies and stocks.
Additionally, the surge in crude oil prices has put liquidity pressure on Bitcoin and other cryptocurrencies.
Famous cryptocurrency analyst Miles Deutscher suggested that while there may be initial turbulence in the markets, historical data indicates that they tend to recover relatively quickly after military conflicts. He noted that, in most cases, markets started to show positive trends after three months of uncertainty.
This observation is based on data covering conflicts between Pearl Harbor in December 1941 and the Iraq War in March 2003. However, given the fact that the cryptocurrency market is still nascent, there is limited data available to determine its exposure to major geopolitical conflicts, except for the Russia-Ukraine battle.
Bitcoin's price movement may exhibit heightened volatility during this period, as it has shown a correlation with the S&P 500 index. Additionally, a report from Bitfinex Alpha suggests that Bitcoin's historical daily volatility remains above its 200-day moving average, indicating the potential for increased price fluctuations.
"Bitcoin has been more volatile on average than the past 200 days in the asset's history," since the month's beginning, according to the firm.
Apart from that, another key event this week is the release of macroeconomic data, including the September Consumer Price Index (CPI) on Thursday.
The US Federal Reserve (Fed) may raise interest rates if inflation remains higher than its target. Changes in interest rates in major economies can have a ripple effect on the broader economy, which can ultimately impact the crypto market.
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