Key Points

Bitcoin’s market dominance has risen from 38% in 2022 to 56%, largely due to accumulation by long-term holders.
Short-term holders are experiencing unrealized losses, which could lead to further market dips.

Bitcoin’s Growing Market Dominance

Bitcoin [BTC] continues to hold the majority share in the global cryptocurrency market, accounting for over half of the $2.1 trillion total. Since the market’s cycle low in November 2022, Bitcoin’s dominance has increased from 38% to 56%, as reported by on-chain analytics platform Glassnode. In contrast, Ethereum’s [ETH] market dominance has remained relatively stable, while altcoins have lost 6.5% of their market share.

Long-Term Holders Boost Bitcoin’s Position

The increase in Bitcoin’s market dominance is attributed to long-term holders, who have significantly increased their Bitcoin supply. Many of these traders became long-term holders after purchasing Bitcoin near the March all-time highs. These holders are currently profiting around $138 million per day, increasing the risk on the sell-side. However, profit-taking activities have decreased. This is supported by data from CryptoQuant, which shows a drop in the Exchange Whale Ratio following intense profit-taking activities in May and July.

Short-term holders, who are more reactive to price changes, are currently sitting on unrealized losses. This has led to Bitcoin’s drop below $50,000 earlier this month. If these investors remain in losses below $59,000 for extended periods, it could potentially trigger a market panic and a severe bearish momentum. On the other hand, leveraged trading data shows a gradual increase in long positions since 18th August, indicating a slight shift towards bullish sentiment.