The dominance index of digital gold, reflecting its market share compared to other crypto assets, has risen to 62% after a dip to 59% in May.
This metric serves as a crucial indicator of market sentiment and the potential onset of an altcoin season. A decline in Bitcoin’s dominance index typically signals growing investor interest in alternative cryptocurrencies.
In other words, digital gold and its derivatives continue to attract capital, while interest in less liquid assets remains restrained. This could delay the onset of a significant altcoin rally.
The chart below shows a significant lag in Ethereum’s price compared to Bitcoin since the beginning of the year:
“The rebound in dominance points to differences in investment approaches amid growing Wall Street interest in cryptocurrencies. Traditional financial institutions are increasingly entering the market, but the main focus remains on Bitcoin. Altcoins have yet to receive similar support,” noted analysts at The Block.
In their view, the influx of capital into less liquid assets could also limit interest in cryptocurrency company stocks. The number of available market instruments likely influences investor behavior as well.
“Traditional players have only a few major crypto-related stocks. Among them are Circle (CRCL), Coinbase (COIN), Robinhood (HOOD), and MicroStrategy (MSTR). This creates concentrated channels for market entry. The altcoin segment, on the other hand, offers thousands of tokens, which potentially leads to capital dispersion and reduced investment concentration,” experts explained.
At the time of writing, Bitcoin is trading around $106,190. Its market capitalization stands at $2.1 billion, according to CoinGecko.
The price of the first cryptocurrency has significantly recovered following the easing of tensions in the Middle East.