Bitcoin has reached a four-year dominance high, making up 63% of the crypto market as altcoins struggle. Its rise coincides with a global increase in money supply which is boosting liquidity. A new trend in centralized finance is emerging, with increased investment in CeFi companies due to regulatory shifts in the U.S.
Bitcoin has recently achieved a significant milestone, reaching a four-year high in dominance amid a sluggish performance from altcoins. A report released by Binance Research on May 6 highlights that the overall crypto market saw a commendable recovery, registering gains of 9.9% in April. This recovery correlates with recent pauses in tariffs, which have uplifted investor sentiment across various sectors of the economy.
The report indicates that Bitcoin now commands 63% of the total cryptocurrency market capitalisation, marking the highest level since 2021. This increase in dominance has been a consistent trend since 2022, bolstered by discussions surrounding Bitcoin as a strategic reserve and its growing reputation as “digital gold”. Many investors are seeing Bitcoin in a new light, as speculation mounts that it is becoming ingrained in the financial mainstream.
Historically, drops in Bitcoin dominance have typically aligned with bullish trends in the broader market, with the last instance occurring in late 2024. However, April’s rise in dominance indicates a shifting sentiment toward BTC, suggesting investors may be moving away from the earlier craze for altcoins.
Adding to Bitcoin’s upward trajectory is the notable increase in money supply globally. The M2 money supply for the G4 economies is anticipated to swell by an unprecedented $93 trillion. This surge in money supply from nations like the U.S., Japan, China, and those in Europe tends to move in tandem with Bitcoin’s price, as it is perceived by many as a safeguard against inflation—hence the term “digital gold.”
Increased liquidity in the markets, facilitated by this monetary expansion, can also ease entry into the crypto markets, generating more enthusiasm among investors. Interestingly, while Bitcoin is showing signs of decoupling from other cryptocurrencies, the Binance report highlights an emergent trend within centralized finance (CeFi).
The past two months have witnessed a notable uptick in funding for CeFi companies, a change attributed to the evolving regulatory landscape concerning cryptocurrencies in the United States, often viewed as a vital hub for global venture capital. As regulations become more favourable, these companies are gaining traction among investors, drawing attention amidst the ongoing shifts in the crypto sphere.
