Bitcoin Dominates at 59%: Unstoppable Institutional Buying Frenzy

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February 5, 2025 by Sadia Ali

With increasing institutional and nation-state interest, Bitcoin’s role as a global asset is expanding.
Market volatility remains, but Bitcoin’s dominance continues to grow, outpacing most altcoins.
Institutional investors are driving Bitcoin’s price stability, contributing to reduced volatility.

Bitcoin has solidified its position as a dominant financial asset, with a market capitalization of $2 trillion, surpassing Silver and major corporations like Meta and Saudi Aramco. Its presence in the global community continues to expand, with its acceptance in El Salvador as a legal tender and Bhutan mining it in a significant manner. In fact, even America is studying its use in a strategic reserve asset.

The regulatory environment surrounding #Bitcoin is constantly changing, and new financial instruments such as derivatives and ETF products continue to develop.

In this article, we analyze how the composition of digital asset investors is changing around it.

Discover more in… pic.twitter.com/7HtFDQfFqI

— glassnode (@glassnode) February 4, 2025

Glassnode reported that unlike traditional markets, Bitcoin’s 24/7 trading capability allows it to react to global events in real time. Over the weekend, Bitcoin dropped sharply following the Trump administration’s tariff announcements, declining from $104,000 to $93,000 before recovering to $102,000.

Ethereum and Solana saw big fluctuations, too. In contrast, BTC continued to have a strong grasp over the $100,000 mark for several weeks, a feat many considered impossible at one point in time.

Bitcoin Spot ETFs Drive Over $40B in Institutional Inflows

Introducing Bitcoin spot ETFs has driven significant institutional interest, bringing in over $40 billion in net inflows. With total assets under management exceeding $120 billion, these ETFs have provided a regulated entry point for institutional investors.

Unlike previous bull cycles, when retail investors with shallow pockets dominated, big entities entered droves in modern times, purchasing BTC. On-chain data validates a behavior shift. Smaller investors have accumulated in a significant manner in bull runs in the past.

This time, they buy in during rallies and sell in during corrections in the marketplace, indicative of a smarter investing base. BTC’s realised cap increased to $850 billion, with new inflows of approximately $450 billion in new capital when the marketplace reached its trough in November 2022.

Volatility Drops Below 50%, Shift from Previous Bull Cycles

Bitcoin’s volatility profile during its current cycle is remarkably different. Realized three-month rolling volatility remains below 50%, a level well below 80%-100% in previous bull cycles. Unlike in previous cycles, when BTC experienced violent sell-offs, current market structure is one of persistent price appreciation with orderly corrections.

Realized losses during downturns have been negligible, with investors having a strong base. Losses have been considerable in one instance recently, in August 5th yen-carry unwind, with investors being otherwise patient. Bitcoin’s dominance level rose between 38% and 59% in 2022, with it drawing in larger amounts of capital over altcoins and emerging as a go-to hedge for fiat debasement.