The dominance rate of Bitcoin, which measures its share in the broader cryptocurrency market, has increased significantly since the start of the U.S. banking sector instability almost two months ago. As per data tracked by the charting platform TradingView, the dominance rate has surged from 42% to 22-month highs close to 49%, indicating Bitcoin’s outperformance in comparison to the broader market. In contrast, the SPDR S&P regional banking ETF has dropped by 35% over the same period. This data suggests that Bitcoin is an anti-dollar liquid play for investors during the banking crisis.
Several banks such as Silicon Valley Bank, Signature Bank, and Silvergate Bank failed in March, creating fears of a banking crisis. The banking sector instability deepened when First Republic Bank became the latest victim. To make matters worse, shares in Los Angeles-based lender PacWest Bancorp dropped over 60% recently. However, Federal Reserve Chairman Jerome Powell stated that the banking sector is “sound and resilient.”
Portfolio Manager Lewis Harland of Decentral Park Capital said Bitcoin’s growing market dominance amid the banking sector instability and the slide in banking stocks is evidence of the cryptocurrency’s strengthening appeal as an anti-U.S. dollar play. He stated that BTC is the high-quality anti-dollar liquid play for investors as the crisis unfolds. Furthermore, expectations of renewed liquidity easing by the Federal Reserve (Fed) have strengthened amidst the banking crisis, indicating a possible dollar weakness ahead.