- In a sign that even the most “degenerate” cryptocurrency traders are looking for relative safety, Bitcoin is emerging as the dominant digital asset in these uncertain times.
- Investors who had been sitting on the sidelines for some time may be seeing the recent pullback for Bitcoin as an opportunity to get in on the asset class.
Even in the rough-and-tumble world of cryptocurrencies, there are “safer” and “more speculative” choices that are available across the spectrum.
In a sign that even the most “degenerate” cryptocurrency traders are looking for relative safety, Bitcoin is emerging as the dominant digital asset in these uncertain times.
After the recent selloff in cryptocurrencies, Bitcoin dominance soared to 45%, the highest level this year, according to data compiled by cryptocurrency company Babel Finance and the firm’s strategists advise that so-called altcoins (anything other than Bitcoin) have struggled.
Despite the fallout of TerraUSD taking down most of the cryptocurrency market along with it, investors poured in some US$299 million to Bitcoin-focused products, as evidence of buying the dip, or diversifying out of bonds and stocks.
Investors who had been sitting on the sidelines for some time may be seeing the recent pullback for Bitcoin as an opportunity to get in on the asset class.
With both bonds and stocks getting hammered by tightening central bank policy, and typical 60/40 stock and bond portfolios that had worked so well for the past two decades no longer providing relief, investors are understandably looking beyond the traditional.
Although products like the listed ProShares Bitcoin Strategy ETF don’t actually have any underlying Bitcoin, exchange traded products in Europe do and they may also be proving to be a source of underlying demand for Bitcoin and contributing to its dominance.
Traders within the cryptocurrency space may also be swapping their stablecoins for Bitcoin over concerns that the contagion from the TerraUSD collapse will spread to other stablecoins.
With demand for the transparent and regulated stablecoin USDC, issued by Circle, rising, some traders may be opting not to pay for the premium in stablecoins and instead buying direct to Bitcoin from other cryptocurrencies, contributing to the dominance.
