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Bitcoin’s “dominance” is near a 2-year high

Bitcoin’s “dominance” is near a 2-year high

Bitcoin dipped 4% to begin the week, even as its share of the crypto market was on the rise. [Kanchanara via Unsplash]

There’s never a dull moment on the blockchain. Here’s what you need to know this week:

Bitcoin’s market share is nearing a two-year high. A closer look at BTC’s “dominance” and its value amid geopolitical and economic turbulence.

5 security tips to protect your crypto (and all your digital activity). October is Cybersecurity Awareness Month, so it’s time for a refresher.

This week in numbers. The projected value of the metaverse in 2032, the surging growth of Bitcoin’s Lightning Network, and more stats to know. 

MARKET UPDATE

Bitcoin’s ‘dominance’ rises amid geopolitical crises

Historically, October has been a good month for crypto — and this year has been no exception, with BTC rising to six week highs above $28,000 to start the month. This week, though, has been more turbulent, and the biggest crypto by market cap was back down below $27,000 on Wednesday. However, bitcoin’s share of the broader crypto market is nearing two-year highs, and one hedge-fund legend even posited that BTC is uniquely suited to the current climate.

Here’s what you need to know.

Bitcoin’s share of the crypto market is approaching a two-year high.

Bitcoin’s “dominance” (or market share) of the $1.1 trillion overall crypto market reached 51.2% on Tuesday — near the 26-month high of 52% it hit at the end of this June. What might be causing traders to shift into BTC? Some analysts see it as a flight to safety — with the inflation-resistant cryptocurrency increasingly serving as a store of value (the role gold has long played for many investors). 

Investors may also be anticipating the approval of one or more spot BTC ETFs, as well as next year’s bitcoin halving (a planned reduction in BTC mining rewards that helps make bitcoin inflation-resistant), which have historically preceded bullish periods for BTC.

Some of Bitcoin’s rising market share may have come at the cost of Ethereum’s relative underperformance – ETH is down 26% compared to BTC since January. Ethereum’s transaction volumes have lagged in recent months. As other altcoins continue to decline, some analysts think BTC dominance should continue to rise

Solana investment products saw the biggest week of inflows in 18 months. 

As ETH struggles, SOL is increasingly becoming investors’ “altcoin of choice,” per a new CoinShares report. Last week, of the $78 million in crypto investment product inflows, $24 million went into Solana-focused products. Overall, SOL funds have recorded inflows for 28 weeks this year (with just four weeks of outflows). One key piece of data: more than 90% of last week’s investments came from Europe, which is outpacing the U.S. in emerging regulatory frameworks

A key crypto-market indicator is down 11%

The CoinDesk Market Index — which encompasses more than 90% of crypto’s market capitalization and is considered a good indicator of crypto’s overall performance — fell by 11% in Q3 of 2023. 

BTC performed about evenly with the index over the three-month span, while ETH underperformed, dropping 12.5% in that period. Coindesk’s report also said that there was a reduced level of risk in crypto markets in Q3, as defined by “standard risk measures.” The report found that crypto has become less volatile and is increasingly moving independently of the stock market. CoinDesk attributes this shift to a number of factors, including a maturation of the market, investors becoming more discerning about tokens, decreasing liquidity in markets, and declining trading volumes. 

The bottom line… 

According to hedge-fund giant Paul Tudor Jones, Bitcoin is built for uncertain moments like this one. Rising interest rates, global inflation, and conflict in the Middle East and Ukraine, all have him gravitating toward BTC and gold — which, as he told CNBC, should “probably take on a larger percentage of your portfolio than historically they would because we’re going to go through both a challenging political time here in the United States and we’ve obviously got a geopolitical situation.” He added that he “will always stick with [BTC] as a small diversification,” because it’s “the only thing humans can’t adjust the supply in.”

SECURITY BRIEFING

Simple security tips that can protect your crypto from hackers and scammers

We all know that our increasingly online lives present opportunities to bad actors — and, as several high-profile incidents in recent months have shown, crypto is no exception. October is Cybersecurity Awareness Month, so it’s the perfect time to review some surprisingly easy tips for making your crypto (and the rest of your digital footprint!) way more secure. Here’s what you need to know. 

  • Use a password manager. Humans are really bad at remembering passwords, which is why too many of us choose simple phrases and repeat them across multiple websites (don’t do that!). Password managers like 1password and Dashlane generate strong, secure passwords and store them for you — no memorization required. (Want to see if your email addresses have been exposed by a known data breach? Check out haveibeenpwned.com.)

  • Enable 2-factor authentication (2FA) across all your important accounts. 2FA can protect an account even if a hacker steals your password. There are several types of 2FA, ranging from less secure (SMS-based, where a verification code is sent via text message) to more secure (an app that generates verification codes like Google Authenticator) to the most secure (a hardware security key like a Yubikey). Consider choosing a more secure method than SMS, because hackers can steal texts using a common tactic called “SIM-swapping” — in which your phone number is transferred to another device. But if no better option is available, enable SMS 2FA — and if that’s not possible, consider using a different service.

  • Protect your recovery phrase. A recovery phrase is a string of 12 to 24 words that is literally the key to a non-custodial crypto wallet like Coinbase Wallet or MetaMask. Anyone with access to your recovery phrase has access to the crypto in that wallet. If you lose or delete your wallet, you can restore it with your recovery phrase — but if you lose your recovery phrase, you lose your crypto. (For many users, keeping crypto in the “hosted wallet” that comes with every Coinbase account is a more convenient option. You can add another layer of security without having to manage recovery phrases by moving some crypto into a Coinbase Vault.)

  • Keep your devices up to date. Make sure all of your devices are running the newest operating systems, and keep your web browsers and other software up to date. Also consider uninstalling questionable or unnecessary pieces of software, especially tools that allow remote access. An ad blocker like uBlock Origin can help protect you from malicious ads, but it’s also key to practice safe web browsing habits — never click on suspicious links, download suspicious programs, or install browser plug-ins developed by unknown third-parties.

  • Don’t brag. In the sage words of Kendrick Lamar: be humble. Just like a brand new Lambo in your driveway could make you a target for burglars, flashing your gains (or losses!) online could make you a target for cybercriminals.

NUMBERS TO KNOW

$4 trillion

Projected value of the metaverse by 2032, according to Acumen Research and Consulting. The market intelligence firm predicts that North America, with its dominant $42.3 billion metaverse market, and Asia, with its massive online gaming community, will drive global growth.

$2.1 billion

Amount raised by crypto firms in Q3 2023, the lowest total since Q4 2020, according to Messari’s new State of Crypto Fundraising report. Current levels are down from a peak of $17.5 billion in Q1 2022.

1,212%

Percentage growth in transactions that Bitcoin’s Lightning Network has seen over the last two years, according to a new report from River Financial. Lightning Network is a layer-2 scaling solution that enables faster and cheaper BTC transactions. Despite the current bear market, the Lightning Network has also seen volumes surge from $12.1 million in August 2021 to $78.2 million in August 2023, a 546% increase.

TOKEN TRIVIA

What is the most secure form of two-factor authentication?

A

Authenticator apps

B

Hardware keys

C

SMS codes

D

Face ID

Find the answer below.

Trivia Answer

B

Hardware keys