Bitcoin Struggles to Maintain Its Dominance

Bitcoin’s consolidation continues. Ever since the top cryptocurrency hit highs above $64,500, it has not been able to breach the $60K price level. Last month, Bitcoin even plummeted to lows of $48.5K. 

This downtrend was triggered by speculations that the American administration would increase capital gain taxes, which would affect crypto investments. Bitcoin is trading at $55,179 at the time of writing, according to CoinMarketCap.

The lack of an upward momentum has been partly triggered by Bitcoin’s dominance falling to 44%, which is the lowest level BTC has gotten since 2018, as alluded to by market analyst Holger Zschaepitz. He explained:

“Crypto market value hits $2.5tn as Ether hits record high >$4k. Bitcoin’s price is currently ~$59k w/its dominance reaching 44%, lowest since 2018, while Ethereum’s dominance is at a record 18%.”

Despite Bitcoin’s dominance falling, Square Inc. recently announced a BTC revenue of $3.51 billion during the first quarter of 2021, which is an increase of more than 11 times over the same period last year.

Institutions bought the recent Bitcoin dip

According to Glassnode co-founders Yann & Jan, panic selling by retail investors caused Bitcoin to plummet. They said:

“While retail investors panic sold, institutions bought this recent Bitcoin dip.”

They had previously said that new market entrants caused the recent BTC panic selling, which saw the cryptocurrency's price nosedive to the $48K level. 

Bitcoin whales are, therefore, in an accumulation mood, as noted by Santiment. The on-chain metrics provider explained:

“Of the 16,104 Bitcoin addresses holding between 100 to 10,000 BTC currently, they own 9.1M BTC ($531.3B in USD). After declining holdings from April 10 to May 4, this group is showing signs of accumulating again with 20k added BTC the past 2 days.”

On the other hand, Bitcoin’s selling pressure from miners has fallen, as stated by a crypto trader tweeting under the pseudonym "Crypto Baby."

“BTC selling pressure from miners is dead. They sent a large amount of BTC to exchanges in Feb this year, but they are moving a relatively small amount of Bitcoins these days. The sellers today seem not long-term investors and miners, but short-term profit takers.”

Although Bitcoin is eyeing the $60K price level and has been struggling to retest it, 2021 has still proven to be a record-breaking year for BTC.