Despite facing threats of tariffs from Trump, Bitcoin stood firm above $90k on the charts. Nevertheless, it was not immune to sell-offs, losing $430 million as prominent U.S Bitcoin ETFs – Fidelity, Ark 21Shares, and Grayscale – registered significant withdrawals.
Could it be that Bitcoin’s dominance is waning, paving the way for altcoins to take the spotlight as investors pursue opportunities with higher market capitalization?
Solana (SOL) and XRP Buck the Trend
After enjoying 19 consecutive weeks of gains, digital asset funds experienced a setback, witnessing outflows of $415 million last week, as reported by CoinShares.
While Bitcoin recorded the largest outflow of $430 million, Ethereum saw a modest outflow of $7.2 million. Nonetheless, it still managed a net inflow of $785 million for the month.
On the flip side, Solana and XRP defied the prevailing trend by attracting $8.9 million and $8.5 million, respectively. The increasing institutional interest in high-cap assets, alongside discussions surrounding potential ETFs in 2025, suggests that the excitement around an altcoin season is at an all-time high.
Why is this happening? According to James Butterfill, the Head of Research at CoinShares, the outflows can be linked to concerns regarding U.S monetary policies and unexpected inflation data.
This might just be the tip of the iceberg, with Trump’s retaliatory tariff measures, a surging dollar and gold prices, and the imposition of 25% tariffs on crucial metals further reinforcing the Federal Reserve’s hawkish stance on interest rate reductions.
Is Bitcoin’s Dominance Being Challenged?
The ongoing consolidation of Bitcoin has sparked discussions of an imminent “breakout,” with historical trends indicating that downturns often precede significant price upswings.
However, this cycle tells a different tale. Unlike previous cycles, the current situation is intricately linked to macroeconomic trends – such as the recent drop below $100k triggered by Trump’s tariff policies.
Remarkably, Bitcoin’s dominance (BTC.D) fell below 61% as investors turned towards alternative options.
With Solana and XRP capitalizing on the ETF trend, supported by robust communities and tangible use cases, the competition for BTC.D appears to be intensifying.
This transition is worth monitoring closely in the upcoming months, particularly amidst escalating macroeconomic uncertainties. The reactions of Bitcoin and high-cap assets like Solana and XRP will be pivotal in validating this hypothesis.