Bitcoin dominance hits 58% amid altcoin, stock market bloodbath

Bitcoin dominance has notched a new yearly high amid a brutal Ethereum-led sell-off.

Bitcoin dominance — the ratio of Bitcoin’s market capitalization to the rest of crypto — has notched a new yearly high of 58% amid a crypto and stock market tumble.

Bitcoin’s (BTC) dominance briefly touched 58.1% in the early hours of Aug. 5 amid a sudden sell-off that saw Ether drop as far as 18% in two hours, while BTC fell 10% in the same time frame. 

IG Markets analyst Tony Sycamore told Cointelegraph that the drawdown serves as a reminder that Bitcoin and crypto assets more broadly sit very much at the “pointy end” of the risk asset spectrum.

“It’s a position wash with some recession and hard-landing fears driving it and some war fears as well given the fact that Israel and Hezbollah have been exchanging rockets over the weekend, and the US is ramping up that military presence in the area,” Sycamore said.

Sycamore explained that the wider bloodbath occurring in Asian markets, including a massive 8% daily stumble in Japan’s Nikkei 225 and South Korean trading halts came back to a wider risk-off move in the global market.

“If you had to point to three markets or areas that did really well at the start of this year, it’d be the tech trade, it’d be Bitcoin and the Japan trade.”

“So I don’t think there’s any surprise that they’re the three trades that have fallen by the largest amount,” he added.

Additionally, Sycamore explained that Ether’s price action had been “copping it” in particular due to the large number of other tokens and ecosystems built on top of the network.

“When altcoins get poleaxed it blows through into [Ether’s] price action as well,” Sycamore said, noting significant unwinding and sell pressure stemming from crypto trading firm Jump Crypto.

The price of Ether is down 30% in the last seven days, while major altcoins including Solana (SOL), BNB (BNB), and XRP (XRP) are down 35%, 25%, and 21% respectively in the same time frame, per CoinGecko data.

Related: Bitcoin eyes $58K CME gap next as 8% BTC price rout sees longs ‘rekt’

Looking forward, Sycamore noted the upcoming release Institute of Supply Management’s (ISM) Manufacturing Purchasing Managers Index (PMI) report as something that could shed light on where the market is headed from here.

“I think that ISM number has the potential to either calm or inflame concern because if all of a sudden we get cracking in the labor market, then it would show us the Fed has missed their window, which would probably lead to further downside for all risk assets, including crypto.”

Sycamore added that if ISM numbers moved into “expansionary territory” then it could be a sign that the market is stronger than expected, putting a solid floor under the price of the risk assets.

“But if all three manufacturing, labor market, and services point the same way, then that’s potentially really problematic,” he said.

The last 72 hours have seen as much as $500 billion shaved off crypto’s total market capitalization, the largest three-day sell-off since August 2023.