By Tom Blitzer
Key Insights:
- Bitcoin’s volume dominance on US exchanges increased from 29% to 44% between January and June 2023.
- The surge in dominance reflects changing market sentiment among US crypto users.
- Lawsuits by the SEC have disrupted the US crypto market, leading to a migration of investments from altcoins to Bitcoin.
Bitcoin, the pioneering cryptocurrency, is experiencing a surge in volume dominance on U.S. exchanges, according to market data platform Kaiko. The latest data from Kaiko reveals that Bitcoin’s volume dominance has risen from 29% in January to an impressive 44% in June 2023. This significant increase indicates a shift in market sentiment among crypto users in the United States.
Crypto Investors Shift from Altcoins to Bitcoin Amid SEC Lawsuits
Kaiko’s findings shed light on the prevailing preferences of crypto investors regarding their exposure to altcoins. The recent legal actions of the Securities and Exchange Commission (SEC) against significant exchanges, including Binance and Coinbase, have disrupted the U.S. crypto market. These lawsuits involve allegations against various crypto projects, including some prominent altcoins. Consequently, crypto users are migrating their investments from altcoins to Bitcoin.
The relationship between Bitcoin and altcoins has been characterised by alternating behaviour throughout the history of cryptocurrencies. Initially, many investors adopted either Bitcoin or altcoins as a hedge against the other, depending on the prevailing market trend. However, the introduction of stablecoins has brought about a shift in this dynamic. Nowadays, risk-averse investors seek the stability provided by stablecoins during times of increased market volatility and uncertainty.
Nevertheless, experienced investors adept at navigating the crypto market continue to adhere to the traditional strategy of alternating between Bitcoin and altcoins. This behaviour leads to fluctuations in market share, a common occurrence in the crypto market.
SEC’s Altcoin Crackdown Sparks FUD Frenzy
The recent legal actions by the SEC have labelled several altcoins as securities. If the court upholds this classification, these altcoins will be subject to regulation by the SEC, even before the ongoing legal battle between the SEC and Ripple reaches its conclusion. This development has instilled fear, uncertainty, and doubt (FUD) among market participants.
The cautious behaviour of crypto users suggests that many avoid the altcoin market until the legal cases are resolved. As a result, investments have been migrated from altcoins to other digital asset classes, such as Bitcoin and stablecoins.
Kaiko’s data corroborate the trend of increasing investment in Bitcoin. Investors favour this less risky asset while closely monitoring a potential upcoming bull run, which could trigger the upcoming Bitcoin halving event.