Bitcoin gets closer to ‘51% attack’ on altcoin market

The percentage of Bitcoin (BTC) in the cryptocurrency market has increased to almost 50% following the altcoin market crash of last week.

On the 13th of June, the Bitcoin Dominance Index (BTC.D) which monitors the importance of BTC in relation to other digital currencies, slightly decreased from its two-year peak of 49.66% which was seen earlier in the week, to 49.29%.

BTC not an “unregistered security” 

The increase in Bitcoin’s dominance has been brought about by the U.S. Securities and Exchange Commission’s (SEC) legal action against crypto exchanges Binance and Coinbase. The SEC’s court documents accused several major altcoins, such as Cardano (ADA) and Solana (SOL), of being “unregistered securities.”

SEC Chairman Gensler recently stated in a video that Bitcoin and Ethereum are not securities.

During times of heightened market volatility, Bitcoin’s share of the crypto market tends to increase, since traders perceive it to be less volatile than other digital assets, excluding stablecoins. For example, when the banking crisis peaked in March 2023, Bitcoin’s dominance relative to altcoins had risen back to 50%.

There are also other indicators that could lead to Bitcoin’s dominance rising above 50%.

DWF Labs, a crypto market maker, has allegedly dispatched millions of dollars worth of tokens other than Bitcoin to exchanges, which could lead to increased selling pressure for certain altcoins.

Stack Hodler, an independent market analyst, has also proposed that the majority of crypto hedge funds would prioritize eliminating their altcoin investments.

However, not everyone is optimistic about Bitcoin’s dominance. For instance, analyst Moustache believes that the altcoin market may have reached its lowest point again, since Bitcoin will be unable to exceed 50% dominance.

Bitcoin dominance risks pullback in June

Technical charts indicate that Bitcoin’s leadership could decrease in the upcoming weeks as alternative coins recover.

“Now is the most thrilling time for Bitcoin,” as stated at BTC Prague 2023.

Since April 2021, BTC.D has not been able to close above the 50% level conclusively, often reversing its gains because of a weekly relative strength index (RSI) that is too high.

Bitcoin is now in a similar situation to what it was last summer, with a retest of the 50% level. Additionally, its RSI is just two points away from its overbought level of 70.

If history is any indication, Bitcoin’s dominance is expected to drop to around 39% by late 2023 or early 2024.

On the flip side, a breakout for BTC will be critical in order to reach heights not seen in more than two years. For example, analyst Crypto Rover views a classic bullish continuation setup with 52% being the next major barrier if this situation comes to fruition.

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