Bitcoin dominates derivatives market, ends May on a high note

Bitcoin's open interest dominance rises to 63 percent in the market, denoting it still rules the crypto market

3 min read

Published: Jun 2, 2022 05:06:54 PM IST

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With every downtrend in the crypto market, Bitcoin dominance rises organically. The current bear market phase has seen the same happening all over again. Though Bitcoin prices take a hit, altcoins suffer the worst losses and have a lesser market share. Bitcoin’s dominance is conspicuous in not just the spot markets, but its rising dominance is apparent in the derivatives markets.

The derivatives market was hit hard in December, and since then, it has been on a decline. The general open interest in the market is also on a decline and currently stands at $25 billion for the total market, down by 50 percent from the November high of $48 billion. These figures resemble the drop that has affected the crypto market. However, Bitcoin has fared better than the other digital currencies on the open interest parameter.

Bitcoin contributes to 63 percent of the open interest in the market. Being the majority holder, Bitcoin has over $15 billion in open interest in the market. The recent increase in open interest dominance for Bitcoin is a step up from April’s decline to 50 percent. This increase in open interest dominance has also led to indicators pointing to a decrease in speculative interest for altcoins which also have been on a decline recently.

The upward trend in open interest dominance follows the general market trend in the crypto market, where Bitcoin has witnessed a similar increase in dominance, though to a smaller degree. If altcoin performance doesn’t improve in the coming weeks, BTC dominance will rise further.

Bitcoin continues being the king. The crypto market has shown evident losses throughout May, but some cryptos have provided more cover than the others. All indexes show Bitcoin as the most effective investment over other cryptos.

The indexes have shown double-digit growth for the month of May. Bitcoin has seen 18 percent losses, while the other indexes' losses were above 20 percent. The losses for large, mid and small cap indexes came out to be 24 percent, 28 percent, and 33 percent respectively.

The altcoin decline has triggered a rise in the BTC dominance, which rested at 42.5 percent earlier in May and by the end of the month, it saw a rise of 46 percent, the highest in the last six months.

Though the market has begun to recover, it is still unclear whether Bitcoin will hold its position or lose it to altcoins in the new month. There is a possibility of altcoins reclaiming whatever dominance they have lost to Bitcoin.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash