Bitcoin’s dominance over altcoins grows amid market uncertainty

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Bitcoin (BTC) dominance over the top fifty altcoins by market capitalization is now at its highest level since prices last approached all-time highs in March, according to a recent Kaiko report.

During the August 5th selloff linked to Japan’s interest rate spike, Bitcoin’s Cumulative Volume Delta (CVD) remained strongly positive on US exchanges, while major altcoins saw extensive selling. This trend highlights Bitcoin’s status as a “crypto safe haven” in times of uncertainty.

Furthermore, the launch of Bitcoin exchange-traded funds (ETFs) in the US has strengthened Bitcoin’s status as an investable asset, while altcoins continue to face higher risk premiums.

The current global de-risking mood and lack of crypto narrative, along with divergent central bank policies, contribute to a challenging macro environment.

Altcoins underperform in Q3

In Q3, large-cap altcoins, including Ethereum (ETH), underperformed Bitcoin. The price of ETH has consistently trailed BTC since the Merger, and the launch of spot Ethereum ETFs in the US has not reversed this trend.

Additionally, most altcoins remained well below their Q1 all-time highs despite more favorable market conditions.

In particular, open interest in altcoin perpetual futures markets has decreased, indicating a decrease in demand. For example, Solana’s (SOL) open interest in Binance has fallen from over $1.2 billion in March to less than $680 million today, the report points out.

Bitcoin’s dominance is shown in ETF flows

Bitcoin’s dominance is also highlighted by ETF flows, as Ethereum ETFs have struggled to attract institutional demand since their launch in late July.

Grayscale’s ETHE fund has seen significant outflows, with 1.18 million ETH leaving the fund in just under two months. According to data from Farside Investors, this amount is equivalent to more than 2.7 billion dollars.

Despite Grayscale’s new Ethereum mini trust attracting nearly $260 million in inflows, it failed to offset the massive exodus from the ETHE fund.

On the other hand, U.S.-traded Bitcoin ETFs have shown more resilience, bouncing back after periods of breakouts. For example, after seeing outflows of $1.2 billion between August 27 and September 6, BTC funds saw net inflows of over $400 million shortly after.

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