Cryptocurrency markets, specifically Bitcoin (BTC), have shown remarkable resilience in the face of the recent upheaval within the U.S. banking system. A research report released by Coinbase on Friday reveals that Bitcoin has outperformed other digital assets since mid-February, with its dominance in the total crypto market cap increasing significantly.
In the wake of the U.S. banking system turmoil, Bitcoin has managed to outpace its digital asset peers. During March, the cryptocurrency’s dominance as a percentage of the total crypto market cap grew to 47.7%, up from 43.9%. The report points out that the onset of the banking system’s upheaval coincided with this acceleration in Bitcoin’s outperformance.
One of the key reasons for Bitcoin’s strong performance, according to the Coinbase report, is the stress in the banking system reinforcing the cryptocurrency’s store-of-value properties. Since Bitcoin mainly exists outside of the traditional financial system, it offers a hedge against the prevailing conditions, making it an attractive option for investors.
Bitcoin’s relative outperformance against other digital assets also stems from investor concerns about the regulatory status of other cryptocurrencies, as mentioned by analysts David Duong and Brian Cubellis.
Furthermore, the report highlights a significant drop in the correlation between Bitcoin and the S&P 500 stock index, which fell to 25% at the end of March, a stark contrast to the 70% peak in May of the previous year. This lower correlation indicates a growing detachment between cryptocurrency and traditional market movements.
The U.S. banking system’s troubles have shown Bitcoin’s strength and benefits, making it a reliable investment and protection against financial disruptions. With ongoing regulatory issues for other digital assets, Bitcoin’s strong performance is expected to continue.
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