Bitcoin’s share of crypto market highest since 2021 partly due to ETFs

Bitcoin’s dominance of the crypto sector is at a three-year-high, reflecting robust demand for US exchange-traded funds holding the largest digital asset as well as a rocky period for smaller tokens.

Bitcoin at the end of last week accounted for almost 55 per cent of the US$2.4 trillion market for virtual currencies, a level last seen in April 2021, according to CoinMarketCap data. The next largest by that metric are Ether, stablecoin Tether, the Binance exchange’s native token BNB, and Solana.

The batch of three-month-old US spot ETFs from issuers including BlackRock and Fidelity Investments have amassed about US$56 billion in assets to date, ranking as one of the most successful debuts ever for a fund category.

The inflows helped propel Bitcoin to a mid-March record of US$73,798. While the token has retreated roughly 6 per cent since then, a gauge of smaller digital assets has sunk more than 30 per cent. The drop coincided with reduced expectations for the kind of looser US monetary policy settings that can fuel speculative gains.

Allocations to the US ETFs by institutional investors have “resulted in Bitcoin performing very strongly relative to the rest of the market,” said Benjamin Celermajer, director at digital-asset investment manager Magnet Capital.

Bitcoin and second-ranked Ether jumped on Monday (Apr 15), boosted by indications that asset managers will soon launch Hong Kong-listed ETFs for both tokens. Bitcoin rose 4.3 per cent to US$66,575 as of 11.50 am in London, while Ether added 6.2 per cent to reach US$3,260. The rallies spurred broader climbs, lifting the likes of Polygon, Cardano and meme-crown favourite Dogecoin.

GET BT IN YOUR INBOX DAILY

Start and end each day with the latest news stories and analyses delivered straight to your inbox.

Sign UpVIEW ALL

The Bloomberg Galaxy Crypto Index has more than tripled since the start of last year in a rebound from a deep bear market in 2022.

Crypto speculators are awaiting the so-called Bitcoin halving, which will reduce new supply of the token in half and is expected around April 20. Previous halvings were a tailwind for prices, though there are growing doubts about whether a repeat is likely, given Bitcoin recently hit a historical peak. BLOOMBERG