Bitcoin’s market dominance has increased to 61.2%, indicating that the altcoin rally was brief, as per Matrixport. Recent Federal Reserve actions and strong labor data have impacted both cryptocurrencies and stocks. Bitcoin is now favored by traders due to its comparative resilience against altcoins amid macroeconomic volatility. The next phase of Bitcoin’s growth is contingent on Federal interest rate decisions regarding inflation.

Bitcoin’s dominance in the cryptocurrency market has surged to new heights, reaching 61.2% as of March 12, according to research from Matrixport, a platform specializing in cryptocurrency financial services. This increase marks a significant rise from a cycle low of about 54% recorded in December, indicating that the recent altcoin rally was fleeting.

Matrixport explained that this recent dominance exemplifies the quick end of the altcoin rally, which only lasted about a month—from the election of former President Donald Trump in November until a robust U.S. jobs report in early December shifted market attention toward a more hawkish outlook of the Federal Reserve.

Historically, Bitcoin’s market share decreases towards the end of market cycles as investors pivot towards altcoins, which are any digital currencies other than Bitcoin. Amidst these market adjustments, the Federal Reserve’s decision in January to maintain interest rates—pointing to optimistic labor statistics—has adversely affected both stocks and cryptocurrencies.

Bitcoin’s value has dropped approximately 20% since the Fed’s announcement on January 29, currently trading at around $82,750, down from its peak exceeding $109,000 in December. Altcoins have reacted even more adversely to macroeconomic fluctuations, leading experienced traders to shift investments from altcoins back to Bitcoin, which has demonstrated stronger resilience relative to the overall crypto market.

Matrixport further noted that the trajectory of Bitcoin’s rally heavily hinges on the Federal Reserve’s future interest rate decisions aimed at controlling inflation. Recent data revealed that the U.S. Consumer Price Index (CPI) declined to about 2.8%—the first drop in both Headline and Core CPI since July 2024—suggesting that inflation is beginning to stabilize. According to CME Group’s analytics, there is a strong market consensus anticipating that the Fed will maintain current interest rates in its forthcoming March meeting.

In conclusion, Bitcoin’s rise in market dominance reflects a shift in investor sentiment towards the cryptocurrency amid recent economic developments. The fleeting nature of the altcoin rally and Bitcoin’s enduring strength highlight the changing landscape of digital asset investments. The future trajectory of Bitcoin largely depends on the Federal Reserve’s monetary policy in addressing inflation, particularly as inflation rates show signs of decline, influencing market stability.

Original Source: cointelegraph.com

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