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Bitcoin (BTC)‘s market dominance has reached 54%, its highest level in more than two and a half years.
According to data from TradingView, Bitcoin’s dominance currently stands at 53.76%, down by almost 1% over the past day.
The chart shows that Bitcoin dominance reached as high as 54.4% earlier in the day before losing some market share to altcoins.
Notably, Bitcoin’s dominance is almost three times that of Ethereum (ETH), the second-largest crypto by market cap, which sits at around 17.4%.
The steady increase in Bitcoin dominance, starting from around 38% at the beginning of the year, comes amid its year-long rally, with the flagship cryptocurrency surging by 81% since the start of 2023.
At the time of writing, BTC is trading at around $34,100, almost flat over the past day.
However, the leading cryptocurrency is up by more than 20% over the past week and by more than 30% over the past month, according to data by CoinMarketCap.
What Led to the Bitcoin Price Surge?
There are several factors that could have contributed to the surge.
First, concerns over inflation, geopolitical risks, and the increasingly polarized U.S. government have prompted investors to seek safe-haven assets, minimizing their exposure to risk.
Bitcoin, with its decentralized nature and limited supply, has emerged as an appealing option for those seeking stability amidst uncertainty.
As reported, Arthur Hayes, co-founder of crypto derivatives exchange BitMEX, has attributed the surge in the crypto market to the costs associated with hawkish U.S. foreign policy, particularly in relation to Israel’s war effort against Hamas.
In a recent blog post, the crypto veteran highlighted the open-ended commitment of U.S. President Joe Biden to support Israel’s war effort and pointed out that this, along with the escalating military budget and increased government borrowing, has fueled concerns about global wartime inflation.
“Added to Ukraine’s tab, America’s military budget is set to truly explode – especially if Hamas’ allies, such as Iran, respond by entering the fray via its proxies,” he wrote.
“This will increase future government borrowing, and the sky’s the limit when it comes to the sums of capital a war can waste.”
Additionally, the possibility of a Bitcoin exchange-traded fund (ETF) gaining regulatory approval has further bolstered confidence in the cryptocurrency.
In fact, crypto financial services platform Matrixport has predicted a major Bitcoin rally if a spot ETF hits the market.
Comparing this to the precious metals ETFs, which have a market cap of around $120 billion, assuming that 10-20% of precious metal ETF investors consider diversifying into a Bitcoin ETF as a hedge against monetary debasement and inflation, Matrixport said we could witness an inflow of $12 to $24 billion into the Bitcoin ETF.
“If Tether’s market cap increases by $24 billion, acting as a proxy for potential ETF inflows, Bitcoin’s price would rise to $42,000, representing a conservative estimate.”
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